Wednesday’s Vital Data: General Electric Company (GE), Tesla Motors Inc (TSLA) and Transocean LTD (RIG)

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Weakness on Wall Street extended into Tuesday’s trading, as the major market indices dipped for a second consecutive day on the week. The Nasdaq led the way lower yesterday, dipping 0.35%, while the S&P 500 shed 0.29% on the day. In options activity, caution is creeping back into the sentiment outlook, with the CBOE put/call volume ratio rising to 0.64. The 10-day moving average held at 0.65.

Digging into yesterday’s most active options, General Electric Company (NYSE:GE) drew heavy call volume after announcing openness to concessions in its deal to acquire Alstrom SA’s energy division. Meanwhile, Tesla Motors Inc (NASDAQ:TSLA) stock rallied after the FTC penned a letter of support for direct sales in Michigan, and Transocean LTD (NYSE:RIG) options traders jumped on calls amid a rebound in crude oil prices.

Wednesday’s Vital Data: General Electric Company (GE), Tesla Motors Inc (TSLA) and Transocean LTD (RIG)

General Electric Company (GE)

In a bid to hurry along the approval process of its $17 billion acquisition of Alstrom SA’s energy segment, GE announced yesterday that it was open to discussing concessions with European regulatory authorities. Steve Bolze, head of GE Power and Water, said the delay is hurting business and creating uncertainty for Alstrom employees.

“We are willing to explore remedies to get this deal done,” Bolze said in an interview, according to The Wall Street Journal.

GE options traders took heart in the news, with 84% of the 65,315 contracts trading on GE yesterday crossing on the call side. Out-of-the-money call options are all the rage for short-term GE options traders, with the overhead May $29 strike sporting peak open interest of 111,347 contracts. Dialing out to the June series, the $27 and $29 call strikes are tops with open interest of 83,647 contracts and 84,387 contracts, respectively.

Tesla Motors Inc (TSLA)

Despite Michigan’s recent anti-direct sales initiatives, Tesla Motors may be gaining momentum for its business model in the state. Recently, the Federal Trade Commission (FTC) urged the Michigan legislature to repeal its ban on direct vehicle sales, which it believes is a special protection for car dealers and is hurting consumers and competition in the state. The FTC is urging Michigan State Sen. Darwin Booher to look into Senate Bill 268, which would create an exception to the direct sales law.

Direct to consumer sales in Michigan would be a major coup for Tesla, and traders sent TSLA stock more than 2% higher on Tuesday in response to the FTC’s letter. Options traders also were quick to jump on the news, pushing volume to more than 109,000 contracts on the day. Furthermore, some 57% of Tuesday’s volume traded on the call side.

That said, TSLA open interest indicates that options traders remain somewhat cautious on the stock’s outlook. Currently, heavy June call open interest lies just below the stock at the $225 and $240 strikes, totaling 5,925 contracts and 2,797 contracts, respectively. However, peak June OI totals 8,855 contracts at the overhead $250 strike.

Transocean LTD (RIG)

Riding on the strength of crude oil prices alone, shares of Transocean have rallied more than 31% since the start of April. Yesterday, crude posted only its second close above $60 per barrel since late December, driving additional activity for oil services firms such as Transocean. Furthermore, RIG stock could be on the verge of a technical breakout, eclipsing its early May highs and looking to challenge its February peak near $20.64.

Options traders appear hopeful for a breakout for RIG stock, with 51% of yesterday’s volume of 64,933 contracts trading on the call side. That said, June open interest for RIG stock is heavily weighted toward the put side. Most of June’s put OI, however, is located at deep out-of-the-money $14 strike, where 57,807 put contracts reside. Open interest at this strike alone outstrips total June call open interest.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/wednesdays-vital-data-general-electric-company-ge-tesla-motors-inc-tsla-and-transocean-ltd-rig-options/.

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