How traders cashed in big on the GE deal – CNBC.com
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“The rumor had been out there,” said Dan Nathan, a CNBC contributor, who first wrote about the activity on RiskReversal.com. “GE is not a name we usually see short-term speculation in the options market.”
Most curious about those purchases is that those April calls expire next Friday, giving whoever bought them precious little time for their bets to pay off.
“The punters were out in force yesterday playing for quick home run, and they got it,” added Nathan.
This isn’t the first time GE has attracted the attention of options traders. Back in early march, a market participant bought 125,000 of the January 2017 30-35 call spread for 50 cents per contract. Since each call contract controls 100 shares, that trade represented a $6.25 million bet that GE shares will rise above $35 by January 2017. With Friday’s move, the firm that put on that trade has doubled their money.
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“Hedge funds have been buying calls for some time now,” noted Nathan.
Even with Friday’s rally, GE shares are still less than half of the all-time high set in 2000.
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How traders cashed in big on the GE deal – CNBC.com
