$GM option bulls drive away with big profits

$GM option bulls drive away with big profits

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

On Dec. 13Market Rebellion’s Unusual Option Activity Service found that 6,500 December $33.50 calls were bought for $0.25 to $0.35 with shares at $33.27. This was clearly fresh buying, as open interest in the contract was just 557 before the activity appeared.

Those calls traded for as much as $2.49 today, a 611.43% return, while the stock rose 8.15% in the same time period, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

GM settled lower on the day by 1.43% at $35.73.

Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!

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