Calls drive profits in $GM

Option traders are driving big profits on upside positions in General Motors (GM) today.

On Sep. 4, Market Rebellion’s Unusual Activity tracking systems found that 4,750 October $31 calls were bought for $1.38 as part of a bullish spread with shares at $30.07. This was clearly fresh buying, as open interest in the strike was only 3,550 contracts before the activity appeared.

Those calls have traded up to $3.73 so far today, more than 2.5 times their purchase price. The stock rose 10.68% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

GM was last higher this session by 9.56% to $32.88. The company announced earlier today that it had partnered with Nikola ($NKLA).