Market News

January 9, 2017  Mon 7:16 AM CT

A complex trade is high bullish on General Electric.

Our monitoring system detected the following three-way trade, with weekly contracts expiring on Feb. 3 in all strikes:

  • 10,000 Weekly 32 calls were bought for $0.37 against open interest of 524 contracts.
  • 10,000 Weekly 33 calls were sold for $0.07 against open interest of 687 contracts.
  • 10,000 Weekly 29 calls were sold for $0.10 against open interest of 1 contract.

The strategy combines a bullish vertical spread with short puts. The call spread is looking for GE to rally above $32 expiration. The sale of the higher-strike contracts reduces the cost of the long calls but limits potential gains, as the trader will be obligated to sell shares if they rise above $33. The sale of the puts further lowers the cost of the spread, but the investor will face an obligation to buy shares if they fall below $29. (See our Education section)

GE rose 0.29 percent to $31.61 on Friday and is up 7 percent in the last three months. The industrial giant's last quarterly results on Oct. 21 were bearish, and its next earnings report is scheduled for pre-market hours on Jan. 20.

Overall option volume was about average in GE on Friday.

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