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General Electric (GE) Put Activity Accelerates Ahead of Earnings

GE puts are being purchased at a faster rate than usual

by 4/18/2013 11:48 AM
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Ahead of tomorrow morning's turn in the earnings confessional, General Electric Company (NYSE:GE) put options have grown increasingly popular, hinting at escalating skepticism. The blue chip's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 0.50, in the 66th percentile of its annual range. Or, in simpler terms, options traders have bought to open GE puts over calls at a faster-than-usual clip during the last two weeks.

Digging deeper, the May 23 put has emerged as a fan favorite, with more than 6,500 contracts added in the past 10 sessions. This strike is now home to peak put open interest in the soon-to-be front-month series, with almost 18,000 contracts in residence. At last check, General Electric Company is fractionally higher at $22.72, meaning these puts are just barely in the money.

GE May open interest changes from 10 days ago

Elsewhere on Wall Street, analysts -- like Tuesday's crop of short-term options traders -- are bullish when it comes to GE. In fact, 75% of brokerage firms following GE consider it a "buy" or better, with not one issuing a "sell" or worse rating. Plus, the consensus 12-month price target of $25.67 sits in territory not explored since October 2008.

Speaking of GE's charts, the stock has added about 62% since its most recent test of support in the $14 area, back in late 2011. Ushering the equity higher have been its 20-week and 50-week moving averages, lingering in the $22.50 and $21.50 region, respectively. More recently, however, the security has struggled to surmount the $23.50-$24 neighborhood, which emerged as resistance in mid-February.

Off the charts, analysts are expecting General Electric to report first-quarter earnings of 35 cents per share tomorrow morning. Historically, GE has spent post-earnings week comfortably higher in three of the past four quarters.


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