JPMorgan Says Options Way Too Optimistic on General Electric
- Strategists say put-spread collars can capture mispricing
- March 14 outlook event is likely to have major impact on stock
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It’s the perfect time for a bearish derivatives trade on General Electric Co., according to JPMorgan Chase & Co.
Options are pricing in too great a probability GE’s stock clears $10 a share, and too little of a chance it drops back toward $7.50 or below, JPMorgan derivatives strategists led by Shawn Quigg wrote in a note Thursday. They recommend using put-spread collars -- buying put spreads while selling calls for zero cost -- to profit from mispricing ahead of a March 14 event where the company will discuss its outlook.