DailyPlay – Opening Trade (GM) – April 26, 2024

GM Bullish Opening Trade Signal

Investment Rationale

The future of GM looks exciting with the restart of its autonomous driving unit and its recent price performance. Investors seem to be paying attention to this once-hot EV stock that is on the verge of a big upside breakout. Valuations are also compelling which makes seeking long exposure lower in risk.  

Technical Analysis

After rallying from its $26 lows at the end of last year, GM recently broke out from its multi-year base of $42. It has since retested this level as support and started to trade higher. Additionally, this strength is coupled with outperformance relative to the market, suggesting a potential breakout above its $46 double top, which puts $60 as an extended upside target. 

GM – Daily

Fundamental Analysis

GM trades at less than 5x forward earnings. This is despite analysts expecting 11% EPS growth next year. This represents a 30% discount to its biggest competitor Ford (F). This is despite higher margins and expected top and bottom-like growth relative to Ford. 

Trade Details

Strategy Details

Strategy: Long Call

Direction: Bullish Calls

Details: Buy to Open June 21st $45 Calls @ $2.30 Debit per Contract.

Total Risk: This trade has a max risk of $2,070 (9 Contracts x $230) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $230 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is in a strong bullish trend.

1M/6M Trends: Bullish/Bullish

Relative Strength: 10/10

OptionsPlay Score: 86

Stop Loss: @ $1.15 Credit. (50% loss of premium paid)

View GM Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Thursday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View GM Trade