GM 1 Strike Puts

Kudos to TM. You'll probably end up making me a lot of money on this trade.

I bought a ton of shares at 1.13 today.

I got greedy and didn't dump any up at 1.8 and 1.7, but whatever.

You think selling these puts are safer than owning the stock here, especially if I will be swing trading it?
 
Market cap is about $900m, assuming current shareholders get 1% of the new GM, they are betting the new GM value will be about $90b. Sounds like denial to me
 
Quote from Random.Capital:

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!



I agree that a bankruptcy filing is the most likely path at this point. That's why I sold the puts. :)
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Interesting stuff. Of course I will only watch but If this goes the BK route which I also think it will I am almost sure that the equity will be zero because the administration wants to punish the debt holders and they would need to be paid first before anything goes to equity or this thing will get held up in court for years. It seems like you are placing money on a major restructuring and no BK.
 
TM, this looks like a very good trade. Too bad I didn't see this thread until after the markets closed. But I will look into it in the morning and hope to sell a bunch of $1 puts at around the same price as you did.

Very low and defined risk as far as I am concerned. And I do agree that it will take at least another 90-120 days before anything final is done which will keep the share price above $1 for the time being.
 
Quote from MJ888:

TM, this looks like a very good trade. Too bad I didn't see this thread until after the markets closed. But I will look into it in the morning and hope to sell a bunch of $1 puts at around the same price as you did.

Very low and defined risk as far as I am concerned. And I do agree that it will take at least another 90-120 days before anything final is done which will keep the share price above $1 for the time being.
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Stock is moving down in AH though on news that bondholders nixed the GM offer. That was the final piece that GM needed for a reorg and to save off bankruptcy.

Thoughts?
 
http://finance.yahoo.com/news/UAW-t...85.html?sec=topStories&pos=main&asset=&ccode=

"But the UAW trust is getting far less in stock than GM said it would get previously. The company disclosed in regulatory filings that it was negotiating to give the government half its shares, with the union trust getting 39 percent. The remaining 1 percent would go to existing shareholders. Upon approval of the exchange, GM would issue 62 billion new shares, then do a 1-for-100 reverse stock split."

Please explain to me how the shares can be worth anything more than a few pennies if this happens?

Right now shareholders own 95% of the company and the stock is worth $1.50. reduce that by 99% and the shares become worth $0.02.

I guess we'll see what happens...
 
Quote from MustPlayOptions:

http://finance.yahoo.com/news/UAW-t...85.html?sec=topStories&pos=main&asset=&ccode=

"But the UAW trust is getting far less in stock than GM said it would get previously. The company disclosed in regulatory filings that it was negotiating to give the government half its shares, with the union trust getting 39 percent. The remaining 1 percent would go to existing shareholders. Upon approval of the exchange, GM would issue 62 billion new shares, then do a 1-for-100 reverse stock split."

Please explain to me how the shares can be worth anything more than a few pennies if this happens?

Right now shareholders own 95% of the company and the stock is worth $1.50. reduce that by 99% and the shares become worth $0.02.

I guess we'll see what happens...
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MUST,

Stock hasn't completely tanked AH and my guess is that GM will extend the deadline for the bondholders till the end of the weekend. If this happens, I will sell the crap out of the Jan 2.5 Calls tomorrow morning.

If they somehow reach a deal with bondholders tonight, then my puts are a winner.

We will see.
 
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