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: