General Electric Stock Halted by $200 Million Fine

GE agreed to settle, but neither admitted nor denied the allegations

Deputy Editor
Dec 10, 2020 at 10:13 AM
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General Electric Company (NYSE:GE) was ordered by the Securities and Exchange Commission (SEC) to pay a $200 million fine relating to claims that the company misled investors. Specifically, it was alleged that General Electric strung shareholders along concerning problems in its insurance and power businesses, which occurred around the time in 2017 and 2018 when the company saw a massive decline in market value. However, GE did not admit or deny any wrongdoing when it agreed to the settlement. Nonetheless, as a result, shares of General Electric stock are down 0.8%, last seen trading at $11.30.  

After steadily climbing up the charts, GE looked well on its way to reclaiming pre-pandemic levels. In fact, yesterday, the equity closed the session at $11.39, its highest close since February 25. The stock's 20-day moving average has helped in its journey to reclaim early 2020 highs, and now General Electric stock is hovering just above its year-to-date breakeven.

Meanwhile, in the options pits, calls have ruled the roost. This is per GE's 50-day call/put volume ratio of 4.45 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all other readings in its annual range. This indicates a much healthier-than-usual appetite for long calls of late.

Today's options pits are popping with activity on both sides of the fence, as well. At last check, over 55,000 calls and 11,000 puts have already exchanged hands -- 1.6 times the intraday average. Most popular is the January 2021 20-strike call, followed closely by the 22-strike call from the same series.

Lastly, now seems like an ideal time to flock toward General Electric options. This is according to the security's Schaeffer's Volatility Index (SVI) of 45%, which sits in the 16th percentile of all other annual readings, implying options traders are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers.


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