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General Electric Company (NYSE:GE) option players are scooping up calls at a 77% mark-up to the expected intraday pace today. What's more, calls are outpacing puts by a margin of more than 6-to-1. The two most active calls are the weekly 8/23 and 8/30 24 strikes, where nearly all of the respective 9,722 and 16,345 contracts traded have done so on the ask side. Implied volatility at each strike has ticked higher, and volume is outstripping open interest, pointing to buy-to-open activity.
The volume-weighted average price (VWAP) for the weekly 8/23 24-strike calls is $0.08, meaning traders will begin to profit with each step above $24.08 (strike plus the VWAP) General Electric takes through this Friday's close. This breakeven mark sits 1.3% above the stock's current perch at $23.77. Although the security was trading north of this strike price as recently as Aug. 16, delta for the call is docked at 0.29, suggesting a less than 1-in-3 chance the option will move back into the money by week's end.
By allowing a little more time for their bullish bets to carry out, the buyers of the weekly 8/30 24-strike call were willing to pay a bit more. Specifically, the VWAP for the further-dated option is $0.15, making breakeven $24.15. Should the stock fail to topple the strike price ahead of next Friday's closing bell, the most the traders stand to lose is the initial premium paid.
Broadening the sentiment scope reveals a bullishly skewed bias in GE's options pits. During the course of the past 10 sessions, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 47,701 calls, compared to 8,751 puts. The resultant call/put volume ratio of 5.45 ranks in the 93rd percentile of its annual range, indicating long calls have been initiated over long puts with more rapidity just 7% of the time within the past year.
Echoing this call-skewed disposition is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.69, which ranks lower than 75% of similar readings taken throughout the last 12 months. Simply stated, speculators are more call-heavy than usual among options expiring in three months or less.
On the charts, the Dow component has notched a respectable 13.2% year-to-date gain, just shy of the broader market's 2013 gain. The stock has been in retreat mode for the last few weeks, however, but remains north of its 40-week moving average. This trendline has contained several pullbacks in the shares dating back to early 2012.