Car manufacturer General Motors (GM) has soared 94% over the past year, seeing more than twice the gains of the S&P 500. One trader sees a pullback in shares occurring over the next year.
That’s based on the September 2025 $47 puts. With 325 days until expiration, 10,000 contracts traded compared to a prior open interest of 170, for a 59-fold rise in volume on the trade. The buyer of the puts paid $3.35 to make the bearish bet.
General Motors shares recently traded for about $52. So shares would need to decline by $5, or about 11%, for the option to move in-the-money. General Motors shares hit a 52-week high of $54.29 last week, but have started to pull back in recent sessions.
Operationally, GM has had a mixed year. Earnings were flat even as revenues rose by 11%, as the company dealt with a slow sales market for cars and higher costs.
Action to take: GM shares are still in an uptrend, and a small pullback here could help set the stage for a year-end rally. The stock still remains cheap at 5 times earnings, even after its big runup.
At current prices, GM also pays a 0.9% dividend.
For traders, the September 2025 $47 puts could see mid-double-digit returns in the weeks ahead on a pullback in shares. Traders may want to take quick profits, especially if there’s any sign that the new pullback underway has gone far enough and looks ready to pivot to the upside.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.