GE Options Trader Braces for Big Retreat

MNK is testing a familiar floor today

Apr 30, 2019 at 2:11 PM
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The U.S. stock market is dragging today on a rare revenue miss from Google parent Alphabet (GOOGL). Among other names making notable moves are former Dow component General Electric Company (NYSE:GE), clinical-stage biotech G1 Therapeutics Inc (NASDAQ:GTHX), and generic drugmaker Mallinckrodt PLC (NYSE:MNK). Here's a quick look at what's moving the shares of GE, GTHX, and MNK.

Earnings Send GE Stock Back Into Double Digits

General Electric stock is up 3.4% to trade at $10.07, marking its first trek into double-digit territory since early April. Early this morning, the industrial conglomerate reported an adjusted first-quarter profit beat of 14 cents per share on stronger-than-anticipated $27.29 billion in revenue.

GE also said its negative cash flow was slimmer than analysts were expecting. However, CEO Larry Culp did not adjust the company's full-year guidance, saying, "One quarter is a data point not a trend."

GE shares are on the verge of closing a bear gap sparked by a scathing J.P. Morgan Securities note in early April, but one options trader today is bracing for another retreat. Trade-Alert highlights a block of 33,600 June 9 puts that were likely bought to open for $638,400 (number of contracts * $0.19 premium paid * 100 shares per contract). This is the most the trader stands to lose, should General Electric remain above the strike through June expiration, while profit will accumulate on a move below breakeven at $8.81 (strike less premium paid).

G1 Therapeutics Pops on Trilaciclib Marketing Plans

G1 Therapeutics stock is near the top of the Nasdaq today -- up 21.2% at $22.50 -- and heading toward its best day on record. This follows news the company intends to file for regulatory approval trilaciclib, a drug used protect bone marrow in those receiving chemotherapy, in both the U.S. and Europe.

GTHX stock remains well off its Sept. 11 record peak at $69.57, but is now trading above $21 -- home to its Dec. 20 bear gap high. Just above here is the equity's 120-day moving average, which hasn't been toppled on a daily closing basis since Oct. 3.

Analysts are bullish on the biotech. Currently, six of seven covering brokerages maintain a "buy" or better rating, while the average 12-month price target sits all the way near that all-time high, at $69.

Mallinckrodt Sinks on Unsealed Whistleblower Documents

Unsealed documents revealed whistleblowers accused Questcor Pharmaceuticals, a company bought by Mallinckrodt in 2014, of bribing doctors and medical staff to boost sales of H.P. Acthar Gel -- a drug used to treat rare infant seizure disorder, whose cost has grown astronomically over the past two decades, and is heavily reimbursed by Medicare. The lawsuits were unsealed after the U.S. Justice Department said it was joining in on the investigation.

MNK stock is finding a foothold in the $15.50 region, which served as a bottom late last year, but options traders are positioning for even bigger losses over the long term. Amid accelerated activity -- the 10,000 options traded so far is four times what's typically seen -- buy-to-open activity has been detected at the October 16 put, where more than 5,800 contracts have changed hands.


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