Bulls ring up profits in $GM

A series of recent trades in General Motors are paying off today.

Investitute’s market scanners identified three bullish positions in the same options within the span of four sessions nearly a month ago:

–On Oct. 31, 10,000 December $39 calls were bought in one print for $0.80 above open interest of 4,021 contracts with shares at $36.82.
–On Nov. 1, 10,000 December $39 calls were bought in one print for $0.58 below open interest of 14,193 contracts but apparently adding to the previous session’s volume with shares at $36.15.
–On Nov. 5, 10,000 December $39 calls were bought in one print for $0.48 below open interest of 24,695 contracts but apparently adding to volume in same strike with shares at $36.22.

Those calls traded for $1.06 this morning, more than twice their last purchase price. The stock rose 6.38% from the time of that trade, 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 up 4.79% to $37.65 today. The auto maker rallied after announcing that it would close five North American plants and lay off about 14,000 workers.