Better-Than-Expected Cash Flow Boosts General Electric Stock

GE's revenue topped analysts' expectations

Assistant Editor
Jan 26, 2021 at 10:48 AM
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General Electric Company (NYSE:GE) stepped into the earnings confessional this morning, reporting fourth-quarter earnings that fell just shy of Wall Street's estimates. Revenue, however, came in ahead of expectations, and the industrial powerhouse also reported better-than-expected free cash flow and a shiny outlook for 2021. As a result, GE is up 6.3%, last seen trading at $11.69.

Steadily climbing on the charts since September, the security has tacked on 70.5% over the last six months. After taking a breather during the second half of January, GE yesterday staged a bounced off its 50-day moving average, and earlier traded above the $12 level for the first time since February 2020.

Meanwhile, options bulls are out in droves, per General Electric stock's 10-day call/put volume ratio of 8.58 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the top percentile of readings from the past year. This indicates that calls haven't been picked up at a faster rate in the last 12 months.

That bullish sentiment is being echoed in today's options pits as well. Already, over 256,000 calls have exchanged hands, which is eight times the what's normally traded at this point and volume pacing in the 100th percentile of its annual range. The most popular is the weekly 1/29 11.50-strike call, followed by the 12-strike call from the same series.

Now looks like a good time to speculate on General Electric stock with options, too. This is per the equity's Schaeffer's Volatility Index (SVI) of 54%, which sits in the 23rd annual percentile of readings from the past year. This reveals that low volatility expectations are being priced into near-term contracts -- a boon to potential premium buyers. .  

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