Options Bulls Eye General Electric Stock After Lofty Bull Note

The security has added over 115% in the last six months

Digital Content Manager
Mar 4, 2021 at 11:59 AM
facebook twitter linkedin


The shares of General Electric Company (NYSE:GE) are up 1.5% at $13.64 at last check, after the security received a price-target hike from Morgan Stanley to $17 from $13 this morning, implying an upside of roughly 26.5% to the stock's Wednesday close. The brokerage firm views the company's investor event on March 10 as a major catalyst, noting it expects GE's profitable aviation segment to return to normal levels this year, which would then open the door for sustainable earnings growth as soon as 2023.

Digging deeper, the security has been chopping higher on the charts since October to notch a fresh three-year high of $14.12 earlier today. The 40-day moving average has been instrumental in GE's climb, containing a late January pullback and helping shares overcome overhead pressure at the $12.30 level. In the last six months, the stock has added 115.3%. 

Analysts were already optimistic towards General electric stock, with eight of the 12 in question carrying a "strong buy" rating, while the remaining four said "hold." Meanwhile, the 12-month consensus target price of $12.62 is a 7.5% discount to current levels, indicating more price-target hikes could be in store for the security going forward.

The options pits are also firmly in the bullish camp, with an appetite for calls. This is per GE's 50-day call/put volume ratio of 7.02 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 95% of readings from the past year. In other words, calls are being picked up at a faster-than-usual clip.

That optimism is only getting reiterated today. So far, 345,000 calls have crossed the tape, which is four times the intraday average, and more than five times the number of puts traded. Most popular is the 3/5 14-strike call, followed by the 14.50-strike call in the same weekly series, with new positions currently being opened at both. This suggests buyers of these options expect more upside for GE by the time the contracts expire tomorrow.

What's more, GE options are affordably priced at the moment. The stock's Schaeffer's Volatility Index (SVI) of 45% sits higher than just 9% of all other readings in its annual range. In other words, this means options players are pricing in relatively low volatility expectations right now. 

Trader: Sell These 8 Stocks in 2021

1633101108

 




 
Special Offers from Schaeffer's Trading Partners