Bulls make big gains with $GE

Bullish option traders are making big gains in upside positions in General Electric (GE).

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the same contract in the name on separate occasions:

–On May 18, 100,000 December $7 calls expiring on Jul. 10 were purchased for $0.80 to $0.81 above open interest of 7,269 contracts with shares at $6.34.
–On Oct. 12, 22,000 more December $7 calls were purchased for $0.54 below open interest of 135,435 contracts, adding to the previous trade’s volume, with shares at $6.81.

Those calls today traded up to $2.82, at least 3 times their purchase prices. The stock rose by as much as 54.57% in the same time period, illustrating the kind of leverage that can be achieved quickly with options.

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 was last down by 0.21% to $9.64. The industrial company has traded sharply higher since topping estimates in its quarterly earnings report delivered Oct. 28.