General Electric Company (GE) Weekly Put Traders Bet on a Floor

General Electric Company (GE) is higher today on news that it will sell restaurant finance assets

by Kirra Fedyszyn

Published on Jun 28, 2016 at 11:09 AM

General Electric Company (NYSE:GE) is trading 1.5% higher at $29.75 after the company reported it would sell the majority of its restaurant financing assets in three separate deals. The stock has now added 11.7% over the past 12 months -- though it's still lower in 2016 -- compared to the S&P 500 Index's (SPX) 1.8% year-over-year loss. Recently, however, bearish bets on GE have been popular, and in the options pits, weekly contracts are gaining traction.

Across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock holds a 50-day put/call volume ratio of 1.37 -- in the 87th percentile of its annual range. That means speculators have been purchasing GE puts over calls at a faster-than-usual rate. Monday's session saw some further bearish action, too, as traders bought to open the weekly 7/8 29.50-strike put -- the day's most active option. Buyers of the put are looking for shares of GE to sink below $29.50 by next Friday's close, when the option expires.

Weekly options are hot again today, with the top two spots belonging to the weekly 7/22 29.5-strike put and 8/5 30-strike put. But by the looks of things, trader may be selling, rather than buying, new positions at these strikes. With today's bounce, these put sellers are expecting the $29.50 or $30 level to serve as a floor for the stock over the next month or so.

With peak open interest in the July series currently residing at the 30 put -- where a large majority of positions were bought to open -- the put sellers could be right, as an unwinding of these bearish bets as expiration approaches may serve as support for the shares. Plus, the $29.50 level limited the stock's recent pullback in May, after serving as resistance throughout February.

Outside of the options pits, General Electric Company (NYSE:GE) could stand to see some love from the brokerage bunch. At the moment, more than half of the analysts following the stock recommend holding or selling it.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

With This Lithium Stock, It Will Be Better to Be Too Early Than Too Late
Click to continue to advertiser's site.
American Airlines Drops on Jobs Update
American Airlines said it will reduce management and support staff by 30%
June Kicks Off With Slew of Economic Data
June begins with another round of retail earnings
With This Lithium Stock, It Will Be Better to Be Too Early Than Too Late
Click to continue to advertiser's site.