General Motors (GM) sold off with the stalling of the Build Back Better spending plan, which was expected to boost sales of electric vehicles. Since EVs will contribute little to GM’s top line and nothing to the bottom line for several years, the market is overreacting.
Our put is deep in the money, so I am recommending we accept shares. I will recommend a call to sell on this core stock in the new year.
As you know, I want to exit the Twitter (TWTR) position. The fundamental story has changed due to the company’s business model transition and the resignation of CEO Jack Dorsey.
Our call is on track to expire worthless. However, I recommend spending a few cents to buy it back so we can exit shares now rather than risk any news over the weekend tanking the market.
While it’s never fun to take a loss, I believe our money can be put to better use elsewhere in the new year.
GM Dec Week Four (12/23) 62.50 Put
Current Stock Price: $56.49
Cash in Hand: $2.05
Action: Accept shares
New Cost Basis: $60.45
Potential Rate of Return: I am targeting breakeven for this position
TWTR Dec Week Four (12/23) 45 Call
Current Stock Price: $43.72
Cost Basis: $49.23
- Buy to close the TWTR Dec Week Four (12/23) 45 Call for around $0.02
- Sell shares at market
Loss: $5.53, or $553 per 100 shares