GM 1 Strike Puts

[TM1982]

Quote from MustPlayOptions:

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.

Problem with your trade is that all this won't go down in the next 3.5 weeks.

 

[MustPlayOptions]

When it goes bankrupt, it's bankrupt. There will be no more premium for those holding out thinking it won't. So it will either go down or it won't in the next few days.

 

[TM1982]

Quote from MustPlayOptions:

When it goes bankrupt, it's bankrupt. There will be no more premium for those holding out thinking it won't. So it will either go down or it won't in the next few days.

If it was going bankrupt, stock would not be at 1.50 right now.

 

[MustPlayOptions]

The strong power of denial is EXACTLY why I bought the puts. The company in my opinion is definitely going bankrupt. When it does it'll also be kicked out of all the indices to add insult to injury.

We'll see who's right soon enough but there is nothing to suggest it's going to be able to avoid it despite the billions thrown away by the government.

People said the same thing about Chrysler but look what happened there.

 

[Random.Capital]

Quote from MustPlayOptions:

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.

I don't believe this is a credible viewpoint. The entire market cap left is under $1B. Spread across the institutions, this is absolute peanuts and barely worth even thinking about.

Similarly, there just isn't enough money in GTZ puts at these prices to interest "substantial" market players, so IMO it is rational to assume that most people buying puts now are small-fry. I think we all know how that story usually ends.

Under the latest plan, current equity holders get 1%. In bankruptcy, this could of course change, but then again, it might not, as there is likely to be a mediated settlement rather than a judicial decree. At 1%, and assuming the gov't stake gets more or less par, we're looking at ~$0.60 value on the current stock.

But...it's all just speculation on all our parts, so I wish everyone the best of luck with their positions, no matter in which direction. Either way, this is a real good play to remind oneself to not bet more than they are willing to lose!

The company in my opinion is definitely going bankrupt.

I agree that a bankruptcy filing is the most likely path at this point. That's why I sold the puts.

 

[MustPlayOptions]

Quote from Random.Capital:

But...it's all just speculation on all our parts, so I wish everyone the best of luck with their positions, no matter in which direction. Either way, this is a real good play to remind oneself to not bet more than they are willing to lose!

Ditto

 

[nazzdack]

Quote from MustPlayOptions:
.....I just bought a few

When they are trading at "a dollar and change", you'll be a hero!.

 

[Uncle_Ho]

Sold .43

Thanks for the info, that's why I check this forum now and then.
This is free money imo.

Why would u own 100k shares at 1.50 when u could own it at .57

 

[TM1982]

Quote from MustPlayOptions:

Ditto

GM is doing everything it can to stay out of bankruptcy right now. I think you would have been better of buying longer term puts to give yourself extra time. I just don't see stock collapsing to under 50 cents in the next 3.5 weeks.

 

[TM1982]

Quote from TM1982:

GM is doing everything it can to stay out of bankruptcy right now. I think you would have been better of buying longer term puts to give yourself extra time. I just don't see stock collapsing to under 50 cents in the next 3.5 weeks.

And also, GM won't just open at .01 one morning. Most likely it would open at .30 or somewhere in that range and drift down. And news could come out during market sessions giving put sellers a chance to cover. I don't feel this is an all or nothing trade. Lots of variables here which usually work in favor of sellers.