Tuesday, February 2, 2010

"Option Activity Alert: Bulls Have High Hopes for General Electric Company" (GE)

A few minutes to the close and the stock is trading up 3.85% at $16.88.
GE is an example of not letting your personal feelings get in the way of analysis. I don't much care for Jeff Immelt's quasi-fascist approach to corporate/government "partnerships" and don't think he's much of a manager. That said I've been more or less positive on the stock for the last 6 or 7 weeks.
In markets, it is what it is. See posts below.
From Schaeffer's Investment Research:

Call players are focusing on the stock's overhead February 17 call

Calls have become the options of choice lately on General Electric Company (GE: View sentiment for GEsentiment, chart, options). During the past five days, traders on the International Securities Exchange (ISE) have bought to open 20,019 calls on the blue-chip conglomerate, compared to 5,567 puts. The stock's five-day ISE call/put volume ratio of 3.60 reveals that bullish bets have nearly quadrupled their bearish counterparts during the past week.

GE SOIRGE's 10-day ISE call/put volume ratio arrived today at 1.79, as speculators have bought to open nearly two times more calls than puts during the past couple of weeks. This ratio ranks in the 70th annual percentile, revealing that traders have snapped up calls over puts at a faster pace only 30% of the time during the past year.

In keeping with this rising optimism, GE's Schaeffer's put/call open interest ratio (SOIR) fell today to its lowest level in months. The current SOIR of 0.91 indicates that calls outnumber puts among options set to expire within three months, and this reading ranks in the 14th annual percentile. In other words, short-term option traders have been more bullishly aligned toward the shares only 14% of the time in the previous 52 weeks.

In the front-month series, peak call open interest of 93,296 contracts can be found at the February 17 strike. With GE perched at $16.80 today, these calls are lying directly overhead. In fact, the February 17 call continues to be the center of attention in today's trading, with 21,000 contracts crossing the tape by midday. The majority of this volume has changed hands at the ask price, suggesting that new calls are being purchased here....MORE

Previously (chronologically from Dec 17, 2009):

Slimming Down at GE Capital (GE)

... Barclays’ Improved View on GE Capital..." Stock 'Bucks" the Market (GE)

Goldman Sachs Lowers Q4/FY09 Estimates On General Electric (GE)

Cheers! To a decade of innovation at General Electric’s labs (GE)

Schaeffer's "Three Stocks to Watch: General Electric" and "A Year of Living Sideways" (GE)
Long time readers know that I don't think much of current GE management. The stock is down over 50% since Jeff Immelt took over in 2001. Considering the assets he had to work with the result is pathetic.
That said the action last week was constructive. Here's a threefer...
General Electric Earnings: Five Analyst Takeaways (GE)

"Goldman Raises Target on General Electric"; "Morgan Stanley Believes 2011 Will Be A Strong Year" (GE)