General Motors (GM) - Get Report stock rocketed higher Wednesday after the automaker reported quarterly results. The price action was exaggerated, so you should expect the stock to move lower now.

The chart below shows the whole story, with numerous reversal signals highlighted.

Image placeholder title

Resistance was set at $32.25 since early June and has stayed under that level until early October. On earnings day, the stock's price gapped higher, following the indicated breakout. At the same time, a volume spike was accompanied by the relative strength index's move into overbought range. This is the first such move in the past six months.

This is a lot of reversal signaling, so we looked at a potential trade of buying the November 35 put option at Wednesday's close. That put closed at an ask price of 0.81. With trading fees for a single contract, this will cost $90. A modest decline in shares of GM will move this long put option into profitable range.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Besides blogging at, Michael Thomsett also blogs at theCBOE Options Huband several other sites. He is author of 11 options books and has been trading options for 35 years.  Thomsett Publishing Website