General Motors Company (GM) Attracts Longer-Term Speculators


Option Brief: General Motors Company (NYSE:GM) is up almost 3% today to trade at $38.78, after TrueCar — an information provider for the auto industry — projected a 17% increase in November sales for the vehicle manufacturer. Meanwhile, call volume is running at a 16% mark-up to GM’s intraday norm, and almost triple the number of puts exchanged.

Most popular has been the January 2015 40 strike, which has seen over 7,700 calls switch hands, including two large-sized blocks totaling 6,134 contracts. Since most of the options traded at the ask price, and implied volatility has ticked higher at this strike, it’s possible that some of this volume consists of newly added bullish positions.

In the event that the calls were bought to open, the speculators are wagering that GM will trek north of the $40 level by January 2015 options expiration. This denotes a rise of 3.1% from the stock’s current price, as well as uncharted territory. Still, even if the shares remain below the strike price over the next 12-plus months, the most today’s LEAPS call buyers stand to lose is the initial premium paid.

General Motors Company (NYSE:GM) has enjoyed some strong price action over the past year, gaining about 55%, and besting the broader SP 500 Index (SPX) by north of 26 percentage points during that same time frame. Fundamentally speaking, the auto giant will release its November sales results on Tuesday, Dec. 3.


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