General Electric: Taking Strategic Positions Ahead of April 17

General Electric Company (NYSE:GE) is back in my sights today as the Q1 2015 earnings season gets underway. I last wrote about trading General Electric options in a January post in which I mentioned that General Electric is in an uptrend and that buying call options was smart. In that post, I recommended buying the GE May 2015 26.000 call (GE150515C00026000) at an asking price of $0.31.

When I wrote that post on January 23, the shares of General Electric were trading around $24.43 and as at market close yesterday, the stock was up 2.88% to $25.73. As at market close yesterday, that GE May 2015 26 call had an asking price of $0.45 after gaining 200% in the day’s session. In fact, the contract has climbed as high as $0.55 on March 18 before it crashed in the following two weeks. Given, the recent uptrend in the stock and options of General Electric, I posit that we might be able to milk some more gains from the stock and it options in the coming weeks.

We Are We Looking At GE Again

  • Decent Earnings Performance

General Electric is set to release its Q1 2015 results on April 17 and I strongly believe that the earnings results will be a catalyst that will send its share price higher. It might interest you to know that General Electric has delivered EPS surprises in all of the last 20 quarters since 2011. More interestingly, is the fact that the company has outperformed earnings by an average of 1.91% in the last four quarters.

The consistent earnings beat is important to the shares of General Electric because the company doesn’t have much momentum that could precipitate high price action. General Electric is a diversified technology and financial services company that offers products and services ranging from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products.

It is expected that General Electric will deliver Q1 EPS of $0.30 down from the consensus of $0.33 from one month ago and the consensus of $0.35 per share that was given three months ago. The average stock price target on General Electric currently stands at $28.63 to mark an 11% upside potential ahead.

  • Optimistic Stock Pattern

The chart above (with added annotations) shows how the shares of General Electric have traded within the last one year. You will observe that the shares of General Electric have been trading in a range for much of the last one year and this is not the least bit surprising. You will also notice that the stock has a number of support and resistance levels. One of the key levels is the $24.80 support (green line) and the $25.80 resistance (red line).

The blue arrow shows how the stock entered a massive uptrend towards its 52-week high of $27.53 after the Q4 2014 earnings was released in January. You will observe that the stock broke out above the support and resistance levels and the stock is gearing up for another breakout now as it nears the $25.80 resistance point.

How to Trade GE Options

It is evident that the shares of General Electric will breakout into new highs if the stock delivers an impressive earnings result on April 17. I am optimistic about the prospects of General Electric and I recommend buying GE call options. The GE Jun 2015 26.000 call (GE150619C00026000) looks attractive at an asking price of $0.62.

— Daily Option Alerts

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