Selloff in GE draws massive ratio put spread as implied volatility explodes
Selloff in GE draws massive ratio put spread as implied volatility explodes. Shares down nearly $1.27, or 14%, this afternoon following allegations of fraud, with option volume on track for nearly 2M contracts as calls lead puts 3:1 and implied vols jump nearly 40 points in the near terms, to YTD highs of 70%. Trade of the day is an opening spread, with a trader selling 115K Oct 8 puts for 66c to buyer 68K Oct 7 puts for 40c. Both legs open and the net credit of $4.87M suggests an institutional view that shares may be oversold and due for a rebound into the fall. Notable trade last week is looking pretty good today- the trader who sold 41K Sep 9 puts for 30c to buy 67K Oct 8 puts for 13c, as the Oct 8s are up 500% ($3.5M) since then.