GE – General Electric Company – Options investors populating the August contract on General Electric this afternoon appear to be bracing for a gloomy couple of months ahead. GE’s shares slipped 1.25% lower in late afternoon trading to arrive at $15.90 by 3:10 pm (ET). Pessimistic players expecting shares to continue to decline ahead of August expiration purchased approximately 2,900 puts at the August $15 strike for an average premium of $0.43 apiece. Put buyers at this strike are poised to profit should shares of the underlying stock fall another 8.4% to breach the average breakeven point to the downside at $14.57 by expiration day. Investors confident shares are not likely to rebound sold 5,400 calls at the August $17 strike to take in an average premium of $0.335 per contract. Call sellers keep the full premium pocketed on the transaction as long as General Electric’s shares trade below $17.00 through expiration in August.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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