Wednesday, November 24, 2010

"Option Volume Soars on General Electric Company" (GE)

On Tuesday the stock closed at $15.76, down 27 cents.
From Schaeffer's Research (Nov. 23):
Option traders have stormed General Electric Company (GE) today, with roughly 96,000 contracts crossing the tape -- well above the stock's expected single-session volume of just 60,000 contracts.

Today's most heavily traded option has been GE's December 16 call, with 19,741 contracts exchanged -- the majority of which crossed the tape at the ask price, indicating they were likely bought. However, with nearly 82,000 contracts currently open at this strike, it's difficult to confirm whether new positions are being added here. If these December 16 calls were, in fact, purchased to open, then it would appear that traders are counting on GE to surmount the $16 level over the next month.

With GE trading around $15.70, these 16-strike calls are just barely out of the money. However, conquering the $16 level may be easier said than done, as the shares recently slipped beneath the support of their 10-week and 20-week moving averages -- both of which are located just above $16....MORE