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Most Active Options Update: General Electric Company (GE)

General Electric Company calls are active as earnings approach

by 4/9/2014 2:03 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is General Electric Company (NYSE:GE).

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Calls have once again emerged as the options of choice on General Electric Company, outpacing puts by a more than 2-to-1 margin. Although the Dow component is bucking the broad-market trend higher -- last seen fractionally lower at $25.70 -- a number of option players are betting on the equity to resume its longer-term uptrend over the next week or so. Specifically, it appears speculators are forecasting a move back above the $26 mark by next Thursday's close -- a time frame that brackets the company's turn in the earnings confessional.

Nearly 15,200 contracts have traded at GE's April 26 call -- 87% at the ask price, pointing to buyer-driven activity. Meanwhile, implied volatility is up 2.3 percentage points, suggesting the initiation of new positions, and data from the International Securities Exchange (ISE) confirms that some of the contracts have been bought to open. Delta for the call is docked at 0.40, suggesting a 2-in-5 chance the position will be in the money at the close next Thursday, when front-month options expire.

The $26 level -- which currently coincides with the equity's 80-day moving average -- has played a very important role in GE's technical life recently, alternately serving as both support and resistance since last October. Should GE fail to muster up the strength to regain its footing north of here over the next six-plus sessions, the most the speculators stand to lose is the initial premium paid for the calls.

As touched upon, though, General Electric Company (NYSE:GE) will report quarterly earnings ahead of next Thursday's opening bell. Scheduled events such as these can often serve as catalysts for a big price move, and GE is no exception. In fact, in mid-January, the stock gave back 2.3% in the session following its quarterly results, while last October, GE jumped 3.5% in the subsequent session. For General Electric's first quarter, Wall Street has forecast a profit of 32 cents per share -- about an 18% drop over the company's year-ago results.


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