Thread: GM - Why is there any value left to their stock?

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  1. #1

    Default GM - Why is there any value left to their stock?

    Seriously, no matter what happens (Ch 7, Ch 11, Prepack or not, even bridge loans) there will be massive dilution. You can see that in the premiums being offered on the puts, why is everyone and their mother not on that side of the trade? No matter what happens, common is going to take a HUGE hit, the gov't is going to get some kind of equity in the deal, and the UAW will prob end up with 20Bil in equity for the pension plan. And thats IF they get the loans/bailout/DIP.

    Am I the only one that sees this?
  2. #2


    Because GM is booming, nevermind that's exaggerating...
  3. #3


    but doing well, over in Europe, they'll still be around =/
  4. #4


    I don't see the put premiums being related, unless you mean they are basically pricing in near zero value, which has been happening for months in the front months and for years in the LEAP's. The put side open interest is high but it's been a short for a long time, and the premiums on the next few months are not outside of the range I would expect them to be in. What am I missing?
  5. #5


    The downside bias you make a good case for, and there is a good chance the gov't gets an equity position. The only reason to take the up side is if you believe the bailout pop is worth trading, or you believe they will eventually survive and pay back the loan before the gov't exercises any warrants (hard even to type that last thing with a straight face).

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