Bears Keep the Pressure on Struggling Blue Chip

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Options traders are sticking with one of the most consistent trends in the last two years. They’re betting against a stock that once ruled the roost in global markets.

General Electric (GE), once the world’s most valuable company, has lost more than half its value since the end of 2017. Today one big investor is looking for that downward trajectory to continue:

  • A block of 200,000 February 6 puts was bought for $0.30.
  • At the same second, 250,000 January 6 puts were sold for $0.15. Volume was below open interest, which suggests an existing position was closed and rolled forward in time.

Puts fix the price where a security can be sold, so they appreciate to the downside. By moving between contracts, today’s trader avoids the quicker pace of time decay that happens near expiration and has an additional month for the industrial giant to drop. (See our Knowledge Center.)

General Electric (GE) with 50-day moving average and “New Low For Year” ShowMe.

GE fell 2.89 percent to $7.22 in afternoon trading and remains at its lowest levels since March 2009. A combination of weak business fundamentals, a heavy debt load and managerial change explain the selloff.

In last month, a trader rolled a bearish put spread into January. Click here for more on that.

Today’s downside roll on GE was the largest in the entire options market. It lifted the put/call ratio in the name to a bearish 5 to 1.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.