This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

GE: Can it Bring Good Things to Life?

Last Friday I got an email from Stephanie Link, co-portfolio mnanager of Action Alerts Plus, asking "What is up with General Electric (GE)? I am hearing a big option trade and volume spike in the stock." After doing a little digging I found out that a major trader had traded a 'buy-write' in the stock. A buy-write is when a trader buys a stock and sells an upside or at the money call at the same time.

A buy-write is generally considered to buy a mildly bullish trade. The trader doesn't thing the stock is going to go down, or is going to slowly rally to the strike price sold. In this case, the trader was thinking GE was going to run to close to 21.00 a share. Now, one of the problems with being GE is that when the market drops, so does GE. It is one of the most correlated stocks to the S&P 500 because the company encompasses about everything: industrial, finance, consumer...you name it.

Let's review the T3/OP video with Jill and Scott for more on the fundamentals and technicals on GE:



While the market has sold off some, and truthfully I think might test 1350, I think that GE is going to follow the path that Alcoa (AA) set on Tuesday. It is going to be a positive earnings surprise and get a nice pop higher. Earnings are on Friday April 20th, not exactly the easiest day to play earnings. The good news is that I don't think anyone is expecting this stock to blow things out of the water. I think a small bullish play makes a ton of sense.

To make matters better, we have gotten a nice IV pop. While our buy-writer at the top may have gotten beat so far, I think he is probably write, GE is heading for a nice slow rally. With the aforementioned vol pop I think a may put spread makes a lot of sense. Lets sell a GE May 18/19 put spread and collect about $0.33. It's a pretty simple, easy and should be a nice winner in short order after earnings. We will buy it back for $0.10.

Trades: Sell to open GE May 19 puts at $0.56 and buy to open GE May 18 puts for $0.33.

OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits.

Mark can be followed on Twitter at twitter.com/OptionPit.

At the time of publication, Jill Malandrino, Mark Sebastian and Scott Redler held no positions in the stocks or issues mentioned.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AA $12.74 -1.10%
GE $24.84 0.18%
AAPL $123.61 -0.51%
FB $83.32 0.38%
GOOG $549.96 -0.94%

Markets

DOW 17,685.94 +7.71 0.04%
S&P 500 2,058.20 +2.05 0.10%
NASDAQ 4,878.41 +15.0480 0.31%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters