Tony Zhang Presents Bullish GE Options Trade In Light Of Biden Renewable Energy Goals

Tony Zhang of OptionsPlay suggested on CNBC's "Options Action" a bullish options trade in General Electric Company GE. He thinks the turnaround story for the stock is starting to take hold. He points to President Joseph Biden's $2 trillion green climate infrastructure plan and says that will put significant weight on General Electric's power and renewable business.

In the last few years, the stock has started to form a base and started to break out above some important resistance levels, Zhang said. It broke above $11 in the last couple of weeks, and it has outperformed its sector in the last six months.

The company reports earnings on Tuesday. The options market is implying a move of 7.6% in either direction. The stock moves 6.3% on average for the event.

To make a bullish bet, Zhang is going to buy the June $11 call for $1.29 and sell the February $11.5 call for 42 cents. The trade is going to cost him 87 cents, and the distance between strikes is 50 cents. If General Electric blows out earnings, Zhang is going to see some losses because the difference between strikes is less than the cost of the options structure.