Unusual Options Activity In GE – Part II
It was just five days ago that I talked about bearish unusual options activity in GE,
Unusual Options Activity In GE
GE has had one hell of a run the last since early December with the stock price increasing almost 100% in a little less than 3 months. Yesterday, I noticed unusual options activity in GE. The Smart Money bought a ton of the April 15 $9.50 and $9.00 put options.
I had no idea why the Smart Money was shorting GE, that is until yesterday. GE presented at the for JPMorgan’s Aviation, Transportation and Industrials Conference in New York Tuesday.
General Electric (GE) shares tumbled after the company said it sees “significant known headwinds to 2019 cash flow” for its industrial division, which was more negative than previous reported. The industrial free cash flow will now be in negative for 2019.
And just like that the stock price dropped below $10, its biggest intraday drop in three months.
Today I noticed even more unusual bearish options activity. These options are even more aggressive than previously reported five days ago because the strike price is even lower, they expire in less than two weeks and the # of put purchased is 5X larger than the puts purchased that expire in April.
In order for these puts to be profitable, the stock price would have to drop about another 20%.
I have my popcorn and will be watching things play out from the sideline.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Negative cash flow is a scary scenario for a Company as leveraged and big as GE. I can’t see them get demand to make up for the shortfall which lead to more sales of assets in my opinion.
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This will have to be a multi-year turnaround project.
LOL...I like.