Why investor is selling calls in GM
Chris McKhann | firstname.lastname@example.org
optionMONSTER systems detected the sale of 13,500 June 48 calls for the bid price of $1.05 this morning. Open interest in the strike was a mere 214 contracts before the trade appeared, so this is a clearly a new position.
These options were likely sold against long shares in a covered-call position, as our systems also found very large GM stock purchases about 20 minutes earlier. The covered call is one of the few plays where small time gaps are sometimes seen between stock and option trades.
The strategy allows the investor to collect premium while holding long shares but will not participate in gains above the strike price. (See our Education section)
GM is up 0.52 percent to $41.65 today, its highest level since 2004. The auto maker's shares have traded up from under $25 a year ago.