General Motors ( GM ) confirmed on Tuesday the company plans to discontinue manufacturing its beleaguered Saturn Ion. The vehicle is currently being manufactured in its Spring Hill, TN factory. The company stated it would find another vehicle for the plant to manufacture in order to avoid layoffs.
This is the latest in a spate of bad news coming from the Detroit auto manufacturer. Toyota (TM), conversely, has recently laid out plans for increased production and newer factories. Many analysts expect that Toyota will soon pass GM as the world’s number one auto manufacturer.
In related news, Motor Trend Magazine announced Wednesday the Toyota Camry has claimed its 2007 Car of the Year award. The Chrysler Sebring and Saturn Aura were among the automobiles selected as competitors for the award.
General Motors Corp. major shareholder Kirk Kerkorian said Wednesday, 22 November, he is planning on selling 14 million shares of GM stock. The sale was made public in a regulatory filing – the same day that Kerkorian’s Tracinda Corp. announced it will offer $55 a share for some 15 million shares of MGM Mirage Inc. The MGM Mirage trade would increase Kerkorian’s stake in Las Vegas casinos, including the Bellagio, to more than 60%.
On Novebmer 9, 2006, the PowerOptions web log considered how the US Government might begin to provide relief to troubled Detroit Automakers ( Democrats May Provide Relief to Detroit ). However, the recent news regarding the Saturn plant may provide evidence investor’s that GM’s stock will stagnate or dip. GM’s stock is up from $20.80 at the beginning of the year to $32.61 at the closing bell on Tuesday.
The strategy outlined below is a bear put debit spreads position combining a fixed maximum potential profit if the stock stagnates or decreases with a fixed exposure if the stock price should rise above the higher strike price ($37.50). The bear-put debit spread is stock options strategy for an investor who believes a stock price is going to be flat or decrease.
| Bear-Put Debit Spreads General Motors (GM) $32.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SELL | Expiration/Strike | Opt. Bid |
BUY | Expiration/Strike | Opt. Ask |
%Return | Break Even |
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| GMXZ | 06 DEC 32.5 | $1.05 | GMXU | 06 DEC 37.50 | $5.00 | 26.60% | $33.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The GM bear put debit spreads stock options positions has a potential return of 26.6% in only 24 days. As long as GM’s stock price is below $32.5 at options expiration, the position will be fully profitable. The break-even price for the GM bear put debit spreads position is $33.55.
PowerOptions’ powerful option investment search tools provide a robust and flexible way to identify a wide array of option trades. Whether an investor suspects a stock will increase, decrease, or remain flat, PowerOptions stock options search tools can aid investors in finding position that suiting their particular risk/reward profile.
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PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a bear put debit spreads for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing stock options positions.
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[tags]Saturn, Ion, Motor Trend Magazine, Toyota Camry, Car of the Year, Sebring, Aura, Kirk Kerkorian, GM, General Motors Corp., TM, Toyota Motor Corp., bear put debit spreads, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]