Industrial conglomerate General Electric (GE) is having a strong year, with shares up over 90 percent. One trader sees further upside ahead going into next year.
That’s based on the March 2024 $105 calls. With 140 days until expiration, 18,015 contracts traded compared to a prior open interest of 138, for a massive 131-fold rise in volume on the options trade. The buyer of the calls paid $13.80 to make the bullish bet.
GE shares last traded for about $111, making the option about $6 in-the-money. The stock hit a 52-week high just shy of $118 back in July.
The stock was trending lower over the past few weeks, but shares have started to trend higher following the company’s recent earnings beat. While revenues are slightly down, shares are still inexpensive at 12 times forward earnings.
Action to take: Shares are setting up for a move higher in the coming months following the recent pullback. Investors can likely see double-digit gains in shares going into the start of next year. At current prices, GE also yields about 0.7 percent.
For traders, the March calls have mid-double-digit upside potential. Being already in-the-money, they have more downside protection than most call option trades. That’s a good way to reduce risk with today’s volatile markets.
More speculative traders can use a higher strike price to bet on a rally in shares in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.