GM 1 Strike Puts
- Thread starter TM1982
- Start date
You must have sold me some, I just bought a few 
That's quite funny, I did the same thing this morning after the news had a chance to hit the tape. I don't generally like selling options, but these have an absolutely defined max loss to them so it's not a normal situation.
Also took some GM stock and unsecured debt.
The reason I came to this is I'm looking for a way to go long volatility on the broader markets without having to (indirectly) buy 700% IV on crap like GM.
This is why:
http://finance.yahoo.com/news/GM-bo...ml?.v=9?sec=topStories&pos=main&asset=&ccode=
Even in their restructuring plan they inted to make the stock worth 1 penny.
Figured a 100% loss vs 100% gain isn't a bad deal for a small "for fun" position.
http://finance.yahoo.com/news/GM-bo...ml?.v=9?sec=topStories&pos=main&asset=&ccode=
Even in their restructuring plan they inted to make the stock worth 1 penny.
Figured a 100% loss vs 100% gain isn't a bad deal for a small "for fun" position.
Under the just-rejected proposal, at 1 penny a share the company has a post-reorg value of just $1B. IMO that is...not realistic.
Good trade Random, at least I think. Who knows what will happen but I didn't go all in on these, scaling in. Will see where stock treads the next few days, may tick down a little lower, so you can sell a few more at a slightly higher price. The premium will start ticking off these things after this week.
In all the proposed plans the general shareholder value is planned on being at most a few pennies. There are direct statements from the company to this effect.
The bondholders have absolutely no incentive to prevent bankruptcy for 2 reasons. First because they have a better chance with a judge than with the company, and 2 there was a story out that suggested that the Obama admin is willing to pay the bondholders off in bankruptcy.
I took the play because I would never forgive myself later if they go bankrupt which I am feeling very certain they will. That's why I took a small "for fun" position so at least I can say I got something if I'm correct and won't lose too much if I'm wrong.
The way I'm looking at the current share price is that the institutions are keeping it elevated to dump as much as they can before they lose it all.
Good luck though because it sounds like your position is bigger than mine.
The bondholders have absolutely no incentive to prevent bankruptcy for 2 reasons. First because they have a better chance with a judge than with the company, and 2 there was a story out that suggested that the Obama admin is willing to pay the bondholders off in bankruptcy.
I took the play because I would never forgive myself later if they go bankrupt which I am feeling very certain they will. That's why I took a small "for fun" position so at least I can say I got something if I'm correct and won't lose too much if I'm wrong.
The way I'm looking at the current share price is that the institutions are keeping it elevated to dump as much as they can before they lose it all.
Good luck though because it sounds like your position is bigger than mine.