GM Reports Earnings Beat as U.S. Demand Grows

The equity has gained over 58% in the last six months

Digital Content Manager
Nov 5, 2020 at 12:02 PM
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The shares of General Motors Company (NYSE:GM) are up 2.7% at $36.19 at last check, after the automaker reported better-than-expected third-quarter earnings, though revenue missed analysts' estimates. The company attributed the largely upbeat results to strong demand for trucks and SUVs in the U.S.

Digging deeper, the security has more than doubled off its March 18 all-time-low of $14.33 to hit an annual high near the $38 level in October. And while shares have cooled off slightly from that peak, the security is soaring above the ascending 80-day moving average, which was a constant source of support during the equity's upward trajectory. In the last six months, GM has gained 58.6%.

Analysts are majorly optimistic toward General Motors stock, with seven of the nine in coverage sporting a "buy" or better rating, and the remaining two sporting a tepid "hold."  Echoing this is the 12-month consensus target price of $41.35, which is an impressive 16.2% premium to current levels. 

The options pits reflect that analyst optimism, with a high appetite for calls. This is per the stock's 50-day call/put volume ratio of 3.36 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 60% of  readings from the past year, suggesting long calls are being picked up at a quicker-than-usual clip. 

That upbeat sentiment still rings true today. So far, 51,000 calls have crossed the tape -- twice what is typically seen at this point, and more than three times the number of puts traded. The 11/6 36-strike call is the most popular, followed by the monthly 37.50 call, with positions being opened at both. 

Now certainly looks like a good time to take advantage of GM's next move with options. The security's Schaeffer's Volatility Index (SVI) of 58% sits in the relatively low 20th percentile of its annual range, meaning the stock sports attractively priced premiums at the moment.

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) ranks relatively high at 72 out of 100, meaning GM has tended to exceed these expectations during the past year -- a boon for options buyers.

 

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