Volume Spike Investor

There has been continued betting today against the US AUTO Sector, in a move that is starting to become as normal as betting against airline stocks.  We have increased PUT OPTION buying today in Ford Motor Co. (NYSE: F) and General Motors Corp. (NYSE: GM).

Ford PUT/STRIKE      Volume    OpInt
SEP08 $6.00 PUTS     8,421     37,802
SEP08 $7.00 PUTS     7,601     20,405
JAN09 $5.00 PUTS    15,476    279,922

There was also some JUL08 $5.00    CALL OPTION activity today, so bets are being made all over the pace.  There have been 14,608 contracts traded today alone with a prior open interest of 9,285 contracts.

GM PUT/STRIKE        Volume    OpInt
JUL08 $10.00 PUTS    10,431   33,712
SEP08 $10.00 PUTS    9,439     57,325
SEP08 $15.00 PUTS    12,465   71,095
JAN09 $5.00 PUTS     11,920   49,287
Jan09 $10.00 PUTS    9,984     261,232

When you look at the open interest of all these options contracts you won’t see that this is highly unusual options trading activity.  But this is still evidence that many traders are adding on to their bets that the US Auto sector isn’t going to be turning around any time in the immediate or very soon horizons.   As of 1:06 PM EST today we are seeing a 3,2% drop in GM to $11.18 (52-week low) and a 2.8% drop in Ford to $4.84 (also a 52-week low).

Jon Ogg
June 30, 2008