General Motors (GM, news, chart) is leading the Dow Jones Industrial Average lower Friday morning. While all 30 components are lower, GM is the worst performer following news the automaker is recalling 857,000 vehicles for electrical problems. Shares fell 30 cents, or 3 percent, to $10.04. In the options market, 26,000 GM puts and 10,000 calls have traded today. The top three trades include a block of 10,000 GM January 7.5 puts traded bidside for $1.22 a contract, a block of 5,000 January 10 puts for $2.38 (bid offer $2.35 – $2.40) and 5,000 of the January 5 puts for 54 cents (bid offer 52 to 56 cents).

With large amounts of open interest in all three contracts, the trades might be closing transactions. It is more likely, however, that the volume represents a substantial butterfly spread on GM. If so, the strategist is selling 2 of the 7.5s for every purchase of 10s and 5s. If so, they paid 48 cents per fly and have a potential profit of $2.02 if GM settles at $7.50 per share at expiration. The profit range is between $5.50 and $9.50, with the debit at risk (48 cents) if the stock falls outside of the profit range at January options expiration.