Tuesday, March 03, 2009

Somebody's Betting GE Down

Two different reports, same suspicions.

That's a snapshot of today's volume for June GE $2.50 PUTs. [Ed: Go to the link if you want to see the screenshot.]

That's over 52,000 contracts traded today, controlling 5.2 million shares.

They were purchased for about 30 cents, which means that the price has to be under $2.20 for them to go "in the money".

This is a bankruptcy bet on General Electric by the third week of June.

That's right - General Electric.



The cost of insuring the debt of General Electric Capital Corp, the finance arm of General Electric Co (GE.N), has widened to unprecedented levels indicating heightened liquidity fears, but these fears appear "irrational," an analyst at Deutsche Bank said.

Credit default swaps (CDS) insuring GE Capital's debt jumped 110 basis points to 500 basis points on Wednesday, according to Markit Intraday, amid continuing concerns over the health of financial companies

With $150 billion of short-term debt, including $98 billion of commercial paper programs at the end of the second quarter, the market has the right to have concerns about ongoing access to the capital markets and attendant cost of capital...

Yah, well, we knew about GECapital; they are a major player in comm'l RE and shipping containers (!!) and a few other sick babies.

But the whole thing going blooey?


Anonymous said...

Capital is not healthy, NBC is whacked, but the "hardware" side of the biz isn't doing horrid. Energy made their numbers last year, Healthcare is doing what they need to do now that the idiot Hogan is gone. Company still made money in 2008, though not as much as people wanted.

That said, Immelt is a moron and needs to go. He got cut a lot of slack because he took over 3 days before 9/11, but he ran out of that wave a long time ago.

Yes - I work there.

Anonymous said...

Anon...none of the above matters. GE is caught in the bezzle and Denninger points out the why in his latest Blogtalk podcast.

To sum up..the numbers don't matter right now.

Anonymous said...

I should have also pointed out (as does Denninger) that lots of healthy firms are getting hammered as the bezzle is being squeezed out of the markets.

Anonymous said...

Thanks guys - you made my day.

Here I thought that while tight, I could ride this storm out in Energy.