Stock Trader Bets $1 Million on GM Rebound
It’s not an incredible leap of faith to have confidence in the inevitable rebound of automotive giants like General Motors when their stock drops. One Wall Street trader is so confident that they are willing to put $1 million of their own money where their mouth is.
According to CNBC, GM shares hit a nine-month low last Thursday, diving 17% in the past three months. This did not dissuade one unnamed trader, who took a risk and slapped down some cold hard cash. Per CNBC:
On Thursday, when GM shares traded at their lowest level since October and options volume ran more than twice its daily average, one trader bet $1 million that the stock could rally nearly 10 percent through the end of the year. Specifically that trader purchased 8,000 of the January 32-strike calls for $1.25. Since buying a call allows a trader to purchase a stock for a set cost at a given time, this trade makes money if GM shares rise above $33.25, or 9 percent, by January expiration.
With plenty of 2015 ahead of us, GM has a lot of time to put together a comeback. Given generally strong sales in international and domestic markets, it’s not totally unreasonable to foresee one trader entering 2016 about $1 million richer.