Bulls get their wings with $GE

It took just under three sessions for option traders to quadruple their money in upside positions in General Electric (GE).

On Monday, Mar. 23, Market Rebellion’s Unusual Activity programs found that 6,500 Weekly $7 calls expiring on Apr. 3 were bought for $0.30 to $0.35 with shares at $6.25. Volume was well above the strike’s existing open interest of 961 contracts, indicating that this was fresh buying.

Those calls traded for as much as $1.20 today, 4 times their initial purchase price. The stock rose 26.88% in the same time frame, illustrating how quickly options can far outperform moves in their underlying shares on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

GE closed up by 7.69% to $7.56. The industrial company traded sharply higher today alongside other industrials after news that Boeing (BA), which also saw unusual call activity yesterday, would resume production of its 737 MAX, which General Electric manufactures the LEAP engines for.