Options Traders React to GE Stock's Big Bounce

Amazon is using JBGS assets for its new Northern Virginia headquarters

Nov 13, 2018 at 2:40 PM
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It's a mixed session on Wall Street as traders weigh U.S.-China trade news against spiraling oil prices. Among individual stocks making notable moves are former Dow component General Electric Company (NYSE:GE), LED specialist Cree, Inc. (NASDAQ:CREE), and real estate investment trust (REIT) JBG SMITH Properties (NYSE:JBGS). Here's a quick roundup of what's moving shares of GE, CREE, and JBGS.

GE Call Options are Hot Today

General Electric stock is up 7.6% at $8.66, set for its biggest one-day gain since June, after the company said it lowered its stake in Baker Hughes (BHGE) to a slight 50.4% majority stake. More specifically, GE will sell up to 101.2 million BHGE shares on the open market, while Baker Hughes will buy 65 million of its own shares back from General Electric -- bringing in roughly $4 billion for the struggling conglomerate.

Today's pop hardly puts a dent in GE stock's 49.2% year-to-date deficit, with the shares tagging a nine-year low of $7.72 yesterday on CEO Larry Culp's dire debt warning. Nevertheless, options traders are betting on even more upside through week's end. Amid accelerated options volume today, GE's November 9 call is likely being bought to open for a volume-weighted average price of $0.14, making breakeven for the call buyers at this Friday's close $9.14 (strike plus premium paid).

BMO Targets 32% Upside for Cree Stock

BMO initiated coverage on Cree stock with an "outperform" rating and $55 price target -- a 32.4% premium to last night's close. The brokerage firm waxed optimistic on Cree's C-suite and potential LED growth in the power semiconductor market. In reaction, CREE stock is up 4.7% at $43.49.

Cree shares have gained almost 29% since their mid-October lows near $34, and are now headed toward their second close above their 200-day moving average in the last three sessions. There's plenty of room for more analysts to raise their ratings on the tech stock, too. While 70% of covering analysts maintain a "hold" or "strong sell" recommendation, the average 12-month price target of $47.27 is a slim 8.4% premium to current trading levels.

JBG SMITH Stock Pops on Amazon Buzz

JBG SMITH Properties assets have been tapped to house and develop the new Amazon headquarters in Northern Virginia, sending its shares up 0.5% to trade at $38.97. JBGS stock has surged 9.8% since taking a sharp bounce off its 200-day moving average in mid-October, and topped out at a record high of $40.39 on Nov. 6. Year-to-date, the REIT is up 12.2%.

JBGS' recent jump has likely caught a new batch of bearish bettors off guard. Short interest on the stock spiked 70.3% in the Sept. 15 through Oct. 15 reporting periods. The 2.04 million shares now sold short is far from extreme, though, representing just 1.8% of the equity's available float.

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