Bears post huge gains as $GE falls

Ge918

Downside options positions turned enormous profits today as General Electric dropped to its lows level in six years.

On Sept. 22, Investitute’s proprietary programs cited the purchase of 7,500 November $24 puts for $0.43 as part of a bearish spread. Shares were at $24.95 at the time.

Those puts traded up to $6.49 this afternoon, 15 times its purchase price. The stock has plunged nearly 30 percent in the same time period, a huge move but still far less than that of its options on a relative basis. Investitute co-founder Pete Najarian mentioned another bearish trade, a large December put roll that just occurred today, on CNBC’s “Fast Money” program last night.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

GE fell 5.89 percent to $17.90 today. The industrial giant continued to slide after cutting its dividend yesterday and drawing several analyst downgrades this morning.

Start your free trial


Mike Yamamoto

Learn more about Unusual Option Activity and join the conversation!

Leave a Reply