LINK I have been repeatedly asked why GM [GM 0.8875 0.1375 (+18.33%) ] is trading UP this morning (to over $1.00!) when the common stock is worthless. Are traders stupid? No. This is all short covering before it goes to the pink sheets tonight. There are some who were long the preferreds, short the stock, but that has largely dissipated. Some have been short against the credit default swaps. This is not that unusual; the same thing happened to Lehman and Bear Stearns, remember. But what about tomorrow? You figure it out: the common equity shareholders are wiped out. A bigger issue is, how long do we wait to get vehicle sales above 10 million (seasonally adjusted) when sales have been so dismal recently? Remember, the GM restructuring is working on the assumption of at least 10 m annual vehicle sales. But look at what's happening: most analysts estimate May vehicle sales at 9.4 million. April was 9.3 million. And May was helped by a big liquidation at Chrysler. Bottom line: we need to get vehicle sales up appreciably in the next several months.
I'm still on a dunce on these matters. I still don't understand why the shorts are covering? If they were long on preferreds then they would be selling so that would cause the stock to go down. And if they were short... well, just don't do **** and you 100% profit.
On the same note, why can I buy June GM $1 Put options for $0.55? Is there any reason to think that in 3 weeks, the stock is not going to be at $0?
You know what is even crazier? I bought some CTIC at $0.42 a while back and it hit $2.23 today. I'm loving this...
I bought some Ford... and I'm hanging onto it come hell or high water!!!! FOREVER!!!! ... or maybe until it drops another 15-25 cents or so.
