Unusual Options Activity: General Motors (GM)

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  • Shares of vehicle manufacturer General Motors (GM) surged higher on Tuesday following the announcement of electric delivery vehicles. At least one trader sees shares moving higher.

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  • That’s based on the January 29th $55 calls. With 16 days until expiration and with shares at $48, the trader is betting on shares moving 10 percent higher this month on the news. Over 13,150 contracts traded against a prior open interest of 205, for a 64-fold increase in volume on the trade.

    The trader paid about $0.72 for the options. Shares of General Motors have been in an uptrend for the past few months, and the recent move sent shares to a high over the past year, with a 16 percent rise in just the past 5 trading days alone.

    Action to take: This short-term trade could deliver double-digit returns in the next few days, but very likely in just the next few days. It will take a further bullish announcement to get shares over the $55 strike price and keep them there. Still, for a short-term trade, it has its merits.

    For traders playing a longer swing higher in shares, which would be the better way to follow the trend, look for an option with a strike date out in June. The stock market likes hearing about EV developments right now, and it’s likely GM will continue to play to what the market wants to hear.

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