GM Call Traders Make Big Moves

Calls were also seeing unusual activity at the major exchanges

by Josh Selway

Published on Nov 22, 2019 at 2:20 PM
Updated on Jun 24, 2020 at 10:16 AM

General Motors Company (NYSE:GM) is trading up 2.2% today at $35.42, bouncing back after yesterday's one-month low that had the shares' flirting with oversold conditions, based on their 14-day Relative Strength Index (RSI) of 32. Plus, traditional automakers could simply be seeing a boost since none of their executives smashed a metal ball through one of their product's windows. Regardless, GM call volume has picked up in a major way.

At last check, more than 68,000 calls have traded today, projecting to roughly quintuple the daily average by the close. Calls account for 18 of the 20 most popular contracts, but most of the demand has been around the February 38 and 39 calls, with blocks of 14,500 contracts simultaneously crossing on each earlier in the session, hinting at some type of spread activity.

Maybe not coincidentally, the automaker's next earnings release is tentatively scheduled for the first full week in February, a timeline these contracts will cover. At the moment, short-term traders aren't paying much for premiums, based on historical norms. GM's 30-day at-the-money implied volatility of 23.2% ranks in the 14th annual percentile, and this number is actually moving lower in today's session.

There was already unusual demand for General Motors calls before today. Numbers from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) show a 10-day call/put volume ratio of 2.29, which ranks in the 83rd annual percentile. So the level of call buying over put buying had picked up in the past two weeks.


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