General Electric Company (NYSE:GE) had a nightmarish October, delivering subpar earnings that prompted a flurry of bearish analyst attention. Unfortunately, it doesn't look like November is off to a much better start, with the Dow stock falling below key round-number level today. Below, we will examine the fallout of GE's earnings report, and how options traders are positioning themselves ahead of the company's investor update scheduled for Nov. 13.
Following its earnings report on Oct. 20, GE shares cratered, dropping 13% in two weeks. It's been a rough year overall for the Dow stock, which has shed over 36% year-to-date. Earlier today, the equity received a price-target cut to $17 from $19 at J.P. Morgan Securities, sending the equity below the $20 level to a fresh two-year low of $19.96. At last check, GE is down 0.5% to trade at $20.06, and is on track for its lowest close in five years.
Nevertheless, analysts are still clinging to the Dow stock. Of the 13 brokerages covering GE, six rate the shares a "buy" or "strong buy." Furthermore, the average 12-month price-target sits at $25.60, a 27.6% premium from the stock's current perch. This suggests more price-target cuts and downgrades could be on the way.
Options traders have unsurprisingly been put-heavy. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows GE with a 10-day put/call volume ratio of 1.10, which ranks in the 93rd percentile of its annual range. This means put buying has been unusually popular in recent weeks.
Digging deeper, the January 2018 17-strike put has been a popular trade today, with more than 31,000 contracts exchanged. It's unclear how traders are positioning themselves here, but anyone buying to open the puts would be betting on General Electric stock falling further on the charts over the coming months.