Believe it or not, General Motors (GM) is the U.S. sales leader in the auto industry with a market share of 19%. That is pretty good for a company that basically was coming "off the canvas" while "reeling on the ropes" only a few short years ago.
There's an old market truism related to sentiment about a stock that goes like this: It is hard for a cat to cozy up to a warm stove after being burned by a hot one! GM was a "hot stove" that singed many a GM believer, perhaps permanently. The "cats" are the fund managers who got singed. The warm stove is GM now, a new and improved version of what was once a great company and maybe will be so once again!
Regardless of any long-term positives possibly ahead for GM, the speculative approach to GM is now revving up. Seasonally the autos tend to be a good long side speculation at the beginning of any New Year. This year should offer that opportunity once again.
Let's review the T3/OP video with Jill and Scott as they walk through the charts for GM, F and the comment on the auto group:
Consider an options trade geared for playing GM to attempt to move up to higher prices in the short-term. The strategy I like for a GM options trade is the bullish vertical call spread, one that expires in June.
This trade is medium in risk because it is a controlled, while medium in potential reward because it is a hedged trade, a strategy that caps the profit.
Trades: Buy to open 3 GM June 20 calls for $2.30 and sell to open 3 GM June 25 calls at $0.60.
The total risk for the spread is the premium paid, or $1.70. As always, I will monitor the trade on this site in the comments section below.
OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits
T3Live can be followed on Twitter at twitter.com/_t3Live_
This complimentary article from Options Profits was originally published on January 3 at 8:40am EST. Don't risk missing over 40 options trade ideas every week and exclusive commentary from over 10 experts. Click here for more information.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV