GE calls: 550% profit in one session

Bullish option traders turned enormous profits in General Electric with today’s resignation of CEO Jeff Immelt.

Just last Friday, Investitute’s tracking systems found that 18,000 Weekly $28 calls expiring on June 30 were purchased for $0.20 with shares at $27.69. This trade, which occurred in one print as part of a bullish roll, was clearly a new position because open interest in the strike was only 855 contracts before it appeared.

Those calls traded as high as $1.30 as GE spiked right after the opening bell, a gain of 550 percent in less than one full session. The stock rose less than 5.8 percent in that time, showing how far and how quickly options can outperform their underlying shares.

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 jumped to $29.47 early in the morning and ended the day up 3.58 percent at $28.94. The industrial giant’s shares had languished under Immelt’s leadership.