General Electric (GE) Options: Unusual Trading Activity

| April 2, 2012 | 0 Comments

GE OptionsOptions in General Electric (GE) lit up our tracking system this morning with a large amount of unusual trading activity.

Even though the market is up nicely this morning, GE is trading flat, up only 2 cents to $20.09.  This is clearly underperforming its DOW peers.  And option traders are jumping all over it and buying put options.

Right out of the gate this morning, option traders started purchasing huge amounts of contracts on GE.  They are buying the April $20, the April $19, and the April $18 puts.

Close to 100,000 contracts have already been purchased across just these three strikes alone.  Prices are ranging from $0.32 for the $20 strikes, to $0.04 for the $18 strikes.  And they’re still buying.

These trades are just simple put purchases, where option traders believe the stock is going to decline in value.  In addition, by buying these options without any others to go along with them, option traders have unlimited gain potential.

I like this trade.  It’s an inexpensive play on GE declining in value.

As you know, General Electric is one of the world’s leading technology and financial services companies.  The company’s Energy infrastructure segment offers wind turbines, gas and steam turbines and generators, integrated gasification combined cycle systems.  They also provide aircraft engine parts and nuclear reactors advanced semiconductor solutions.

This large put buying is due to its recent risky decision of trying to bring jobs back to America.

In fact, Jeff Immelt, General Electric’s chief executive, said the decision to put $1 billion into the group’s domestic appliances business to bring jobs back from overseas is “as risky an investment as we have ever made”.

I think that pretty much says it all.

And I believe he’s right.  If this decision fails, it’ll be hung around Immelt’s neck forever.

It’s obvious, most option traders agree this isn’t the best idea.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.
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