Ge options are elevated, but it doesn't look like a bullish bet (GE)

Posted in General, Options 
June 18th, 2009

General Electric shares have traded nearly a full-day’s volume and call buying in the options market is elevated; the call activity was among the most active for any stock in yesterday’s trading, as well.

But the activity does not seem to be a bullish directional bet. It appears to be a professional trading strategy being employed by multiple traders that seeks to capture the company’s $0.10 dividend on some shares at very little risk.

To make a long story bearable, large traders appear to be applying a neutral strategy that seeks to take advantage of the retail options crowd who might have options that they forget to exercise, thus allowing professional options traders to collect dividends on some unexcercised contracts.

If it’s successful, the pros can clean up a small profit risking very little capital.

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