General Motors (GM) is rallying after reporting a better-than-expected third-quarter profit and record revenue and reiterating its full-year guidance. Revenue jumped 56% from a year ago, while profits climbed 37% year over year, driven by the prioritization of large pickup truck and SUV production amid supply shortages. Management appears confident demand for its vehicles will persist despite economic challenges.
The only real negative in the report was that GM revised its forecast for electric vehicle sales lower due to delays in its battery-cell operations at a new factory in Ohio. GM now expects to sell 400,000 EVs by mid-2024 rather than by the end of 2023.
The post-earnings rally in the stock signals investors are more concerned with GM’s short-term performance than they are with EV production.
We were called out of our shares last week, incurring a large net debit. Now that earnings are behind us, I am recommending we sell a close-to-the-money put to generate income to reduce that net debit. I am more than willing to accept shares and sell calls if our put is in the money at expiration.
You can enter today’s trade even if you were not in the previous one. Just be aware that we will be managing and tracking it based on the ongoing position.
Current Stock Price: $37.99
Net Debit: $12.96
Action: Sell to open GM Nov Week One (11/4) 37 Put
Current Option Price: $0.68-$0.71
Recommended Limit: Set your initial limit order at $0.69, but adjust as needed to sell a put today
New Net Debit: $12.27
Expiration: After the close on Friday, Nov. 4
Potential Rate of Return: I am targeting breakeven for this position