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GE Gets Positioned For a Decline

David Russell|writer, OptionMonster
Thursday, 24 Sep 2009 | 12:21 PM ET

General Electric has rallied back to its highs from early 2009, prompting one large investor to position for a decline.

OptionMonster's tracking systems detected the purchase of 5,500 November 16 puts for $0.67 and the sale of 5,500 November 13 puts for $0.14. Volume was more than twice open interest in both strikes and the transaction resulted in a net debit of $0.53.

GE is down 2.5 percent to $16.58 in midday trading. The industrial and financial conglomerate is up 18 percent in the last month, outpacing a 2.18 percent gain for the Dow Jones Industrial Average. GE is the parent company of CNBC.

Today's put spread trade will generate a maximum profit of 466 percent if GE closes at or below $13 on expiration. Another investor sold 3,500 November 17 calls for $0.93, also reflecting an expectation the shares are headed lower. Volume was below open interest in the strike.

The next scheduled event that could serve as a catalyst for the shares is the release of third-quarter earnings before the market opens Oct. 16.

Options volume in GE was about evenly split between calls and puts today, marking a contrast with the more bullish pattern over the past 20 days when calls outnumbered puts by 2 to 1.

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David Russell is a reporter and writer for OptionMonster.

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