General Electric (GE) adds 7 cents to $19.80 and is one of 23 Dow stocks holding gains heading into the final hour of trading Wednesday. An interesting recent trade on the stock today is a spread, in which the investor sold 25,000 August 21 calls on GE at 8 cents to buy 40,000 Oct 22 calls for 10 cents. The massive ratio spread traded on AMEX and might roll a position in Aug 21 calls opened on 6/22 when 25,000 traded for 22 cents (rolling out of Jul 20s). The activity in the Oct 22s looks opening and, if so, the spread seems to reflect diminishing expectations for a move to $21 (6.2 percent) through the August expiration (30 days) and hopes to a move beyond $22 (11.3 percent) by mid-October. Another bullish trade on the stock today is a risk-reversal, after one investor sold 10,000 Jul 19 puts on GE at 6 cents to buy 10,000 July 20 calls for 12.5 cents. The bullish combo might close a position ahead of this week’s expiration or it might be a short-term bullish play on GE’s earnings, due out the morning of expiration Friday.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.