Shares of carmaker
General Motors (GM) have been trading in a range over the past year, with shares now trading near the lower end of their range. One trader sees the possibility for a rebound in the coming weeks.
That’s based on the March 11 $52 calls. With 30 days until expiration, 7,591 contracts traded compared to an open interest of 159, for a 48-fold rise in volume. The buyer of the calls paid $1.98 to make the trade.
Shares are currently around $51, so they would need to rise less than 2 percent for the option to move in-the-money. And the $52 strike price is far under the stock’s 52-week high over $67 per share.
Action to take: With the stock down 9 percent over the past year, it’s been an underperformer. And shares have been trading in a range, with a low around $50 per share. That points to a potential bounce higher in shares in the coming months, which could outperform the overall market. At present, the stock does not pay a dividend.
Traders can potentially make mid-to-high double-digit profits with the March calls, although they don’t have a lot of time left before they expire. Given the rangebound nature of shares, traders should look for a quick profit, and a move back down to the low end of the range to take profits.
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 of the companies mentioned in this article.