By David Russell of OptionMonster
NEW YORK -- General Motors (GM) has been breaking out amid strong auto sales and bulls piled into the name Wednesday.
OptionMonster's systems tracked a flood of activity in GM, with more than 530,000 contracts changing hands by the closing bell. That was 15 times average volume and made General Motors the second-busiest company in the option market behind only Apple. It normally doesn't even make the top 10.
Short-term trades were the first to stand out, with the Weekly 36 calls expiring this Friday purchased for 7 cents to 22 cents. The Weekly 37.50s expiring on June 27 also hit for 19 cents to 22 cents.Long calls lock in the price where the auto maker's stock can be purchased, letting investors cheaply position for a move higher. The contracts can also generate significant leverage if shares move in the right direction, which is precisely what happened Wednesday. GM was up less than 2% at the time but continued its rise and ended the session higher by 3.57% at $36.52. The Weekly 36 calls inflated to as much as 90 cents, and the Weekly 37.50s more than doubled to 46 cents in the thick of the action.