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GM 1 Strike Puts
- Thread starter TM1982
- Start date
Quote from Uncle_Ho:
Someone just bought at least 30,000 puts from .46 up to .49.
Are they covering something or executing? I noticed OI went up like 30k overnight too. Someone is really payin up to get in this one.
Who knows. Could be a wide variety of reasons. I wouldn't worry about it. Just keep an eye on the stock in case it starts to head down and you want to cover. There won't be any huge gaps down though, it will be a slow drift. You will have time.
I think that if bondholders accept the plan outlined today, then existing shareholders common stock will be worth zero.
From my reading of the 8K, the proposed bondholder deal would result in the existing common stock being worth zero.
Not a small amount, but zero.
Why is that?
According to the 8k,
http://biz.yahoo.com/e/090528/gm8-k.html
common stock in the new GM would be as follows:
72.5% to the U.S. Treasury 2
17.5% to New VEBA
10% to Old GM
My interpretation of "old GM" means bondholders.
Therefore shareholders of "old GM" get zero of the stock in "new GM".
From my reading of the 8K, the proposed bondholder deal would result in the existing common stock being worth zero.
Not a small amount, but zero.
Why is that?
According to the 8k,
http://biz.yahoo.com/e/090528/gm8-k.html
common stock in the new GM would be as follows:
72.5% to the U.S. Treasury 2
17.5% to New VEBA
10% to Old GM
My interpretation of "old GM" means bondholders.
Therefore shareholders of "old GM" get zero of the stock in "new GM".
Quote from TM1982:
Right on. That's why I said the other day I would sell long term calls. I'm short Jun 1 puts and short Dec 1 calls. I think I will kill this trade.
That's a similar question to why FRE was at $5.10 in early September 2008, and why FNM was above $7 at the same time.
The answer: some people overpay for stocks.
The answer: some people overpay for stocks.
Quote from Uncle_Ho:
Yea I've heard that 20 times in the past 24hrs.
One question, IF ITS SUPPOSED TO BE ZERO WHY IS IT TRADING $1.30???
No one has yet to give me a logical explanation for that one
Quote from Uncle_Ho:
WHO ARE THE BASTARDS BUYING THESE TODAY???
It's obviously not going in the next 3 weeks now that the bondholder's reached an agreement. What do you all think?
Implied volatility is thru the roof on the underlining. You will not see the premium budge until after june 1. In fact the premium will likely increase up until june 1, then nose dive on an announcement.
PS, there was a PARTIAL bond agreement with far less than needed.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aA06tIqPUyM0&refer=home