GE Volatility is Real High

Our next event on using options in a longer term portfolio is here

My last blog on GE was here before they cut their dividend

GE Volatility is very high

GE volatility is all over the map lately.  First the news is bad and then the news is good and then it is bad  and so on and so on.  I cannot remember when a large sleepy company had this much trouble just getting out of its own way in a long time.  IBM comes to mind back in the early 90’s when MSFT crushed it as the whole world went to the PC and IBM took a long time to right the ship.  You remember when IBM made PC’s.  Well they did and eventually sold the business to Lenovo.  What does this have to do with GE?

Options Quotes and Charts from TradeHawk

GE’s business is as transparent as a rock

GE is going through big changes and no one really knows how it will end up.  Business is never easy but GE spent some big dollars at bad times and now the new CEO has to wade through all that.  Business, like trading, is just sticking around for opportunities and then you make the most of them.  GE right now is in the sticking around mode and the market has a hard time pricing that.  10% weekly swings in the stock price is not nothing.

Options Quotes and Charts from TradeHawk

Longer Term IV is too cheap

That being said $7 seems like a tough place for GE to go again but it is not out of the question.  The longer term GE volatility is still dollar cheap but at a higher volatility.  .23 for the Jun 7 ordinary puts does feel too cheap.  Short term feels choppy down  and long term is probably up as the CEO tries to load all the bad news early.

Trade short short term and long long term

I like short term ratio put spreads, long 1 short 2 and owning long term puts with some 12 level calls.  if set up right, one can get the calls and puts for a large credit.  We will cover the idea in our Gold Lab on Thursday. Join Option Pit as a Gold Member and learn how to price trades for less risk and more reward.

 

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Disclosure: GE positions

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