General Electric Co. (NYSE: GE) opened at $39.45. So far today the stock has hit a low of $39.09 and a high of $39.77. As of 10:50, GE is trading at $39.51, up $0.22 (0.6%).GE surged yesterday and has reached a new one-year high today after the company's GE Energy Financial Services unit bought a stake in natural gas processor and distributor Regency Energy Partners (NASDAQ: RGNC) from HM Capital Partners for $603 million. Though GE is a notoriously flat stock lately, Warren Buffett saw potential for long-term growth when he bought nearly 8 million shares in the low 30's in Q1 2006. With its new step into the energy sector, some analysts think GE is poised to break free of its flat pattern. Recent technical indicators for GE have been bullish but deteriorating slightly, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $35 range. GE hasn't been below $35 since April and has shown support around $37 recently. This trade could be risky if the stock ends its moderately bullish run, but even if that happens, this position could be protected by its 200 day moving average, which is currently at $36 and rising.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent controls a long, hedged position in GE. He does not own or control a position in RGNC.
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