GE Options Trader Braces for a Bigger Retreat

Puts have been popular on GE recently

by Karee Venema

Published on Sep 12, 2019 at 3:10 PM

General Electric Company (NYSE:GE) stock jumped to a four-week peak of $9.51 earlier. However, the shares have since swung 0.5% lower on news the company plans to buy back $5 billion of existing debt, and one options trader appears to be bracing for an even stiffer pullback.

At last check around 93,000 calls and 74,000 puts have changed hands, a relatively light day of options trading for GE. The weekly 9/13 9-strike put is most active, due to a 25,000-contract block that was bought to open for $50,000 (number of contracts * $0.02 premium paid * 100 shares per contract).

This initial premium paid is the most the put buyer stands to lose, should General Electric remain above $9 through expiration at the close tomorrow, Sept. 13. Profit, meanwhile, will accumulate on a move below breakeven at $8.98 (strike less premium paid).

More broadly speaking, options traders have been buying to open puts relative to calls at a quicker-than-usual clip lately. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GE's 10-day put/call volume ratio of 0.87 registers in the 84th annual percentile. The October 7 put has seen the biggest increase in open interest over this two-week time frame, and data confirms notable buy-to-open activity here.

Given GE's longer-term struggles -- the former Dow stock is down 23% year-over-year -- it's likely some of this recent put buying is at the hands of traditional options bears. However, considering General Electric is up almost 13% month-to-date, and holding above its 200-day moving average today, it's also possible shareholders are initiating protective puts to guard paper profits against any downside risk.

ge stock daily price chart on sept 12

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.
Tesla Drops Prices to Boost Demand
Tesla is cutting North American and Chinese prices by as much as 6%
DPZ Sizzles After Same-Quarter Sales Bounce
Comparable-store sales in the U.S. rose by 14% during the first two months of the current quarter
With This Lithium Stock, It Will Be Better to Be Too Early Than Too Late
Click to continue to advertiser's site.