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Most Active Options Update: General Electric Company (GE)

General Electric Company option traders eye a breakout above resistance

by 4/24/2014 1:20 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).

Most

Calls have been preferred over puts in General Electric Company's options pits in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, over the past 20 sessions, speculators on these exchanges have bought to open 117,578 calls on GE versus 33,486 puts, resulting in a top-heavy call/put volume ratio of 3.51.

This trend is continuing in today's session, with roughly 25,000 calls on the tape, compared to around 19,000 puts. With all but two of the top 10 most active strikes expiring in three months or less, the equity's 30-day at-the-money implied volatility has shot 9.3 percentage points higher to 12.7%, pointing to an increased demand for short-term options.

Meanwhile, nearly half of the day's call volume has centered on the June 27 strike, where 11,063 contracts have traded -- nearly all on the ask side, pointing to buyer-driven activity. What's more, IV has ticked higher, hinting at the initiation of new positions. Delta for the call was last seen lingering near 0.38, indicating a less than 2-in-5 chance the option will be in the money at the close on Friday, June 20 -- when back-month options expire.

Looking at the charts shows that GE has struggled against the $27 mark since falling below this level during an earnings-induced drop in late January. In the near term, this area could continue to serve as a ceiling, as peak call open interest in the front-month series resides at the May 27 strike. Simply stated, large accumulations of call open interest can often translate into options-related resistance, as the hedges related to these bets begin to unwind.

However, General Electric Company (NYSE:GE) is edging closer to this overhead mark today, up 0.5% at $26.55. Yesterday, rumors began swirling that the Dow component may possibly be in talks to acquire French industrial firm Alstom SA for a reported $13 billion. Alstom has since denied the M&A speculation.


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