The strategy we have been looking at that gave us a 10x example and has also provided other trade opportunities that ultimately provided multiples in the result is helping us find other trades. Let’s look at how it works.
The recent setup and trade we used as an example of how this works is proving very effective in the current market climate. (Here is the previous article and here is our recap.) What have been doing is looking at stocks that are getting impacted by broader current trends, looking at longer term options positions and then select any options that seem to have high potential and the most ideal premium. (This is not something we get credit for, Andy Chambers did a great job of outlining it in his Market Propulsion model. You can get more on that here.)
Since we have seen a lot of activity in the green energy and EV space lately, that market segment has offered a fertile field of potential stocks to take advantage of. Adding to the momentum is the recent Inflation Reduction Act that layed out some incentives for consumers and manufacturers to produce EVs.
GM had been struggling through some issues lately but is playing catch up to other EV manufacturers who have been stealing the spotlight. That is a good thing as it creates a situation where GM stock may not have seen the full effect of the lift all of the others are getting.
The chart shows it has found footing from its 10 day moving average and moved above the 50 as well. It looks to be reaching for its 200. Setting a target of 50 for GM lets us start shopping for potential options trades that may be a bargain. By extending that timeframe out to as much as a year or more, we have plenty of time for the move to play out.
As you start to look at the different expirations you’ll see that Jan 20 2023 has the Call Options for the 50 strike under a dollar.
While many of the factors show GM could realistically climb up to 50 and beyond (which could double that Jan 20 call) it really only has to keep making a run at it long enough for those calls to get more popular and start climbing for this trade to work.
We’ll keep an eye on this one and check back in to see how this example plays out.
Keep learning and trade wisely,
Market Wealth Daily