Last Friday, trading on GMGMQ was halted unexpectedly. Despite various websites stating FINRA was behind the trading halt, there was surprisingly no official announcement from FINRA.
Well the silence is over, and yesterday night FINRA announced that the stock formerly know as GMGMQ (itself formerly known as General Motors), will start trading again on July 15th under the ticker symbol MTLQQ. The name change and the new symbol will hopefully prevent people from accidentally buying thinking this is the new Government owned GM. (again, no such publicly traded shares exist)
What does this mean for me, a put owner? My put is finally in the money, and if the stock continues its decline, I can exercise and make a nice small profit. Will market manipulation kick in again and give MTLQQ another dead cat bounce? Only time will tell.
If you’re long MTLQQ, keep in mind that management has stated on their website that they expect no value for common share holders. Personally I’d get out while I can.
Since purchasing GM put options about a month ago, I’ve been following the GM bankruptcy closely, perhaps a bit too closely. The original plan of buying puts, waiting for the stock to hit $0, then exercising seemed like such a fool-proof plan to start, until the fools started boosting up the stock price. Now that expiration is just 3 days away, here is what I know, and what I plan to do. Fellow put owners take note:
1. Since GMGMQ trading is halted, and the “last trade” was $1.15, the put options are in fact out of the money, and will expire worthless if you just sit and wait it out. At least that’s what’s expected to happen according to the OCC. There is always a chance that the OCC will issue a memo citing special circumstances due to trading halt of the underlying symbol, but I think that’s wishful thinking.
2. Selling the option is not possible, since it’s also not being traded.
3. Pray that the stock starts trading again to bring the stock under $1? It’s been 2 days since the halt, and FINRA hasn’t officially said anything. I really wouldn’t count on the stock trading again before Friday.
So my solution?
Exercise the put, out of the money. So you create a short position in your account, take the cash, and wait for the stock to start trading again so you can cover. This not only removes the “ticking time bomb” that is the option, when GMGMQ opens again with the new symbol, it’s bound to crash towards $0. Or you can wait it out for the courts to cancel the stock. However if you do, calculate margin interest wisely.
Keep in mind you need margin trading to exercise into a short position.
I’ll post again as the day draws near, but so far, that’s the plan? Chime in 
Around 3PM today, FINRA halted trading of the Old GM Stock GMGMQ. The company, which has been renamed Motors Liquidation Company, has stated repeatedly that common shareholders are unlikely to see any value, since liabilities far exceed assets.
Usually in a chapter 11 process, the new company does not emerge until the liqudation is completely, at which point in time the old shares are canceled. However with the Government backed fast-track, the new GM has emerged before liquidation. This caused a lot of confusion among casual investors, who hear great stuff about the new GM, and wish to invest. The ended up purchasing GMGMQ shares, which are not related in any way to the new entity, and will NOT become new GM shares.
The GMGMQ stock was up 40% today until FINRA has finally decided it’s seen enough. The stock is no longer traded, and chances are will be cancelled to prevent market confusion.
disclaimer: I own July $1 puts.
