Bullish – GM – $30.46
We saw a slightly less volatile week in the equity markets, ending lower but lacked the acceleration from the previous week. The VIX also retreated over the week, and Put Call ratios eased from extreme levels. While there are still downside risks, the QQQ has held a significant support level at $270 on Friday. Our base case for next week is for the QQQ to stabilize and hold the $270 support level, however a break below $270 support on the QQQ would bring $250 targets to the downside.
GM Trade Idea:
On CNBC’s OptionsAction show on Friday, Tony Zhang looked at GM the longer term opportunity with electric vehicles. GM and Nikola have dominate the news cycle, but we want to focus on the longer term opportunity. Whether Nikola is a scam or not, its impact on GM in the long run is fairly limited. Our focus should be on GM’s vision for developing alternative powertrains for their vehicles. With 25 electric vehicles planned for launch in their portfolio, double what their competitors have planned, presents a much large opportunity for GM in the future of electric vehicles. And if Nikola becomes a success, GM provides a much safer way to play for that upside. Expecting GM to trade higher, Tony is selling an Oct $30 Put @ $1.50 Credit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience.