Friday, July 16, 2010

* UPDATE General Electric (GE) - Earnings Results

This is an update to the blog posted yesterday General Electric (GE) - Earnings Preview on Vol Pattern.

GE is trading $14.91 with IV30™ down 1.4%. The LIVEVOL™ Pro Summary is below.

In yesterday's article I noted that:
GE has followed a consistent pattern for seven out of the last eight earnings starting with the 10-10-2008 cycle and ending with the last earnings cycle on 4-16-2010. Specifically, a straddle sale at the close on the day of earnings and a purchase back the day after was a winner seven times. Further, five out of the last five times have been winners.

GE had earnings last night, the Options Tab today (after earnings) is included (click to enlarge).

We can see the ATM straddle is now worth $0.26. Yesterday, the straddle was worth $0.57. The one day trade would have turned a 54% profit ex-commissions. The updated earnings and dividends stats are included (click to enlarge). This makes six in a row for GE.

The price action in GE is a little too bearish for my liking so I am doing the close on the trade early. There is certainly a good chance of a pin and therefore closing this straddle for < $0.05 (rather than $0.26), but I think there's also a chance it goes < $14.50. A fun little bet could be to take $0.02 from the $0.31 win and buy the July 14 puts. You never know...

This is trade analysis, not a recommendation.

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