Stock or Call Option in the Case of General Electric (GE)

Stock or Call Option in the Case of General Electric (GE)
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Executive Summary
Financial trading is one of the common cash flow streams for many people, especially now that we are in the technology and internet era. Financial trading is the business of investing in a company’s stock, those that are listed in the Exchange market. Companies move to the stock market as a means to gain financial muscles. Investors on the hand gain access to cash flows in terms of dividends and from the sale of the shares. There are many theories that guide financial traders into making informed decisions. The trading market is run on the assumption that information is free-flowing and everybody can access it. Financial experts have come up with different theories and financial derivatives that aid in the decision making in order to reduce the risks of making loses and increase the chances of making profits. General Electric is one of such corporations that are listed in the stock exchange giving investors different channels to make investments and speculate on the profits they make. There are two fundamental approaches to the stock market. These are options and underlying stocks. These approaches have different factors that determine their viability to an investor. General Electric has been facing challenges in the stock market and investors are keener on how they invest in order to ensure that they do not make losses on their principal investments. The future of the company seems bright, giving investors the hope that they will continue making profits from informed trading with the company’s stock. Compared to other companies, GE may not be the best stock to invest in to make quick returns, but many investors depend on trading to make other type of investments including on the underlying stock to receive dividends.
Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc526856308 \h 21.0 Introduction PAGEREF _Toc526856309 \h 42.0 Literature Review PAGEREF _Toc526856310 \h 42.1 Option Pricing Theory PAGEREF _Toc526856311 \h 52.2 Capital Asset Pricing Model PAGEREF _Toc526856312 \h 72.3 Stock valuation theories PAGEREF _Toc526856313 \h 93.0 Research Methodology PAGEREF _Toc526856314 \h 123.1 Case Study Method (General Electric) PAGEREF _Toc526856315 \h 123.2 Data collection PAGEREF _Toc526856316 \h 134.0 Presentation Findings PAGEREF _Toc526856317 \h 174.1 Analyzing the data PAGEREF _Toc526856318 \h 174.2 Reflection on the findings PAGEREF _Toc526856319 \h 185.0 Implications, Recommendations and Conclusion PAGEREF _Toc526856320 \h 19References PAGEREF _Toc526856321 \h 20
Stock or Call Option in the Case of General Electric (GE)
1.0 Introduction
General Electric (GE) is a multinational conglomerate headquartered in Boston, Massachusetts. The company, whose current Chairman and CEO is Mr. John L. Flannery, was founded in 1878 by Thomas A. Edison (GE, 2018). The company is involved in many markets with some of its major investments being in renewable energy, aviation, transport, healthcare, and oil and gas sectors employing more than 300,000 people. General Electric is listed in the New York Stock Exchange, creating the opportunities for millions of people to inves...