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.
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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.