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Could it be that the auto companies could teach the banks what to do with bailout money? Amongst the news about GM (up .16 to $3.76 at the time of this writing) that the Fed approved GMAC to become a bank holding company, thus making it eligible for some of the $700 billion set aside to rescue banks, and that the U.S. Treasury committed $6 billion to support GM’s finance and lending unit, was the report today that the company announced that it would offer 0% financing on several 2008 and 2009 models to boost year end sales. Now, isn’t that what the bailout money is for? Making it easier for banks to lend out money at lower interest rates to qualified borrowers so that those borrowers can buy things and get the economy headed north again? Um, how many of you have seen your credit card rates fall? Of course, a car company is different from a bank. But the tax dollars used to bail them out are the same -- ours -- and you’d think that they would be put to the same, general use.
Call option volume in GM is about 20% higher than put option volume today. The options also indicate that theoretically there’s about a 40% probability that GM will trade up to $5 between now and January expiration. They also indicate that there’s about a 36% probability that it will trade down to $2.50 in that same period. But because so many contestants hold GM, and because GM seems like it’s trying to use the tax dollars our government is giving it, I’m rooting for the $5.00 mark.
Tom Preston
thinkorswim, Inc.
Member FINRA/SIPC/NFA
thinkorswim, Inc. and its registered employee, Tom Preston, do not solicit or recommend any form of trading in the individual stocks (or their derivatives) mentioned above. Please do careful, independent research before investing any money as well as weigh the possible consequences on your particular financial situation before doing so. The risk of loss may be substantial.
