General Electric (NYSE: GE - option chain) shares are soaring higher today due to a number of factors such as sinking oil futures, but also on comments from Vivendi CEO Jean-Bernard Levy. Levy said in an interview with the Financial Times that he has heard GE CEO Jeffrey Immelt say several times both privately and publicly that GE has no intention of selling its 80% of NBC Universal. Levy may have more information that the average investor on this matter since Vivendi owns the remaining 20% of NBC. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NBC.GE opened this morning at $28.54. So far today the stock has hit a low of $28.53 and a high of $29.10. As of 12:25, GE is trading at $29.10, up $0.94 (3.4%). The chart for GE looks bullish and S&P gives GE a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $24 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just three and a half months as long as GE is above $24 at December expiration. GE would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
GE hasn't been below $25.60 at all in the past year and has shown support around $26 recently.
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 owns and controls hedged positions in GE.
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Reader Comments (Page 1 of 1)
9-02-2008 @ 3:24PM
charlie said...
ok keep NBC but get rid of some of the bias "reporters" that are there giving ther personal opinions and comments rather than delivering the news.
As an educated viewer, i don;t appreciate the bias and vicious comments from Keith Oberman and others. I may or may not like who he is talking about but he is supposed to be somewhat neutral and just give the facts.
FOX news is number one. They give both sides of an issue a chance to speak and let the viewer make up his own mind. It must work because they are far ahead of NBC in the ratings.
9-02-2008 @ 10:55PM
doug said...
FOX news number one? They give both sides of an issue? This can't be the same FOX news I watch which is so obviously conservative biased as to be hilarious. I watch it when I want to have a good laugh and see how the Bush administration is duping the republican lemmings who don't have a brain to think for themselves.
9-18-2008 @ 12:50PM
Vince said...
Since Aug/07 GE shares have dropped $21.00 almost 50%, its time to sell NBC and replace Mr. Immelt