The shares of General Motors Company (NYSE:GM - 28.48) are testing support atop their 10-week moving average, and option traders see a rebound on the automaker's horizon. In early trading, GM has seen about 6,800 call options change hands -- more than five times the number of puts exchanged.
Most popular are the February 30 and March 29 calls, which have seen roughly 3,800 and 1,900 contracts cross the tape. The majority of the calls have traded at the ask price, and implied volatility is trending higher at both strikes, hinting at buy-to-open volume.
Digging deeper, the volume-weighted average price (VWAP) of the front-month calls is $0.10, meaning the buyers will reap a reward if GM conquers the $30.10 level (strike plus VWAP) by Friday's closing bell, when February-dated options expire. This timeframe also encompasses the company's turn in the earnings spotlight on Thursday, Feb. 14, so the buyers could be betting on a post-earnings pop for GM. However, even if GM retreats in the next few sessions, the maximum risk is limited to the initial premium paid for the calls.