What's behind heavy call selling in GM
Chris McKhann | firstname.lastname@example.org
More than 7,500 January 2014 37 calls were sold yesterday, with prints of 3,197 and 4,000 going for $1.03 and $1.02 respectively, according to optionMONSTER systems. This is a new position, as the previous open interest at that strike was just 121 contracts.
The calls may have been sold naked in a bet that GM won't be trading above $37 by that expiration. The delta of the options is just 0.23, suggesting a 23 percent probability that the stock will be above the strike price at that time.
The calls could also have been traded against an existing stock position in a covered call strategy, which would be bullish up to the strike price but not beyond. (See our Education section)
GM was down 0.98 percent to $29.37 at the end of the day. The auto maker finished Friday at $29.86, its highest close in about 18 months. Shares were at a 52-week low of $18.72 in July.