Best GE hedge?

Discussion in 'Stocks' started by DataCruncher, Dec 17, 2009.

  1. Want to protect against GE downside....
    curious as to what you think is best option....perhaps just use a short S&P ETF.

    What do you think?
  2. Long GE put? :D
  3. I sold a bunch of those puts a while back.

    Jan 16's


    In all honesty I think GE is a good buy for a long term horizon. (ie 10 year outlook)

    I have accumulated quite a position the last few months. Thing was selling in the single digits.

    The only Financial I feel is a good buy.

    Plus its a nice cash cow for collecting call premiums on long positions.
  4. I used to trade GE quite a lot; it didn't seem to correlate very well with anything. You could check for some possible ideas. Maybe you could think about using a collar for some/all of the position. If you put on a collar for 50% of the position, you would be somewhat protected and still able to participate if GE starts moving up.
  5. I was also looking at XLI, GE is probably the largest holding in that ETF, but due to the large financial component in GE, the correlation probably isn't very good.
  6. Yahoo finance lists the beta of GE as 1.7. Couldn't I just use that info to calculate the right ratio of short S&P ETF shares to hold in order to hedge GE exposure?
  7. I have been considering the put options also; do you think the IV on the put options makes them a bargain right now?
  8. data, i am looking at 1.208 beta on GE, for more update number. Yahoo, and other free sources beta's lookback were more on multi year. FYI
  9. GE is far from bankrupt. Where's the risk? -$2-5 from current prices if earnings get really bad?

    Sell calls, buy vol.
  10. Why don't you look into a CDS. I guess then you have counter party risk.
    #10     Dec 19, 2009