Dan Nathan Sees Unusual Options Activity In General Electric

On CNBC's Options Action, Dan Nathan said that the options volume in General Electric CompanyGE on Wednesday was 2.5 times higher than the average daily options volume. He added that the most of the activity happened because the stock went ex-dividend. Nathan noticed one big options trade, when the stock was trading at $30.50. A trader sold to open 100,000 contracts of the March 33 calls for $0.22 each. The breakeven for the trade is at $33.22 and Nathan suspects that calls were sold against a long stock position. If the stock trades above $33 at the March expiration the trader is going to have to sell the stock. The premium is almost equivalent to the quarterly dividend, so with this move the trader is looking to double the dividend payment. Nathan presented the daily chart of General Electric for the last 15 years and he showed that the stock broke out above its down trend. He thinks that the stock is going higher and he wouldn't cap its upside.