Aerospace and airplane component manufacturer GE Aerospace (GE) is up over 70% in the past year. One trader sees further gains in the weeks ahead.
That’s based on the August 16 $200 calls. With 22 days until expiration, 10,2298 contacts traded compared to a prior open interest of 107, for a 96-fold rise in volume on the trade. The buyer of the calls paid $0.31 to make the bullish bet.
GE Aerospace shares recently traded for about $174, meaning the stock would need to rise by $26, or 15%, for the option to move in-the-money.
The move is aggressive, but possible given that the company just reported strong earnings and surging demand for aftermarket parts, sending shares to a new 52-week high.
GE Aerospace is coming off a mixed year. Earnings are significantly lower, largely from the overall GE spinoff. But revenues for eh aerospace division are up 11%.
Action to take: Shares are surging higher as a momentum trade. Today’s buyers can likely see double-digit returns from here in the coming months, as a speculative trade. GE Aerospace also pays a 0.7% dividend.
For traders, the August $200 calls are aggressive, as they have just a few weeks to play out. The trade can likely see high double-digit or even triple-digit returns, given its low cost.
But the trade is unlikely to move in-the-money, so traders should look to take quick profits in the coming days.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.