Options Trading News

February 22, 2013  Fri 10:24 AM CT

General Motors has been trending lower for more than a month, but one large trader apparently believes that it will drive higher in the long term.

optionMONSTER's Heat Seeker tracking system detected the purchase of 10,000 January 2015 30 calls in a single print this morning for $2.92. This is clearly a new position, as open interest in the strike was just 840 contracts before the session began.

These long calls, which lock in the price where the trader can buy the stock, are looking for GM to gain roughly 24 percent by expiration in nearly two years. The options could be sold at a profit earlier if they rise in value with any rally before then, but they will expire wortheless if shares stay below the $30 strike price. (See our Education section)

GM is up 0.38 percent to $26.61 after briefly dipping below its 100-day moving average yesterday. The auto maker had pulled back after hitting a 52-week high of $30.68 in mid-January and fell sharply after its earnings report last Thursday, breaking below its 50-day moving average.

Overall calls at all strikes are outpacing puts by more than 5 to 1 in the session so far.
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