Ever since it hit the skids eighteen months ago, guessing the bottom for General Electric Company (NYSE: GE) has been one of Wall Street’s favorite parlor games. GE was trading above $30 in March of 2017 but dropped to less than half that price by March of this year.

Since then, GE has mostly traded in a range between $12 – 14. Frankly, I do not expect that to change much over the next couple of months since it will take years for the company to fully implement its corporate restructuring plan. However, I am betting on GE to be trading in the top half of that range by the time this option expires on October 19.

I have resisted the temptation to bottom fish GE until now but with a perfect IDEAL score of 10 and improving technicals, I feel this trade offers a lot of upside potential with minimal downside risk. The short put trade I am recommending below will generate an option premium yield of at least 4.6% over 50 days, which works out to 33.7% on an annualized basis.

And if I’m wrong and GE closes below $13 on expiration day? In that case, we’ll start participating in GE’s nearly 4% dividend yield and write a profitable covered call option against our position as soon as the numbers turn in our favor.

At this point, any unexpected news from GE is more likely to be positive than negative. The company’s CEO alluded to the possibility of more divestitures occurring soon in a statement accompanying GE’s Q2 results. With Q3 results expected to be released around the third week of October, we may get some unexpected good news on that front just as this option is about to expire.

Regardless of how many contracts you sell, it’s absolutely critical that you follow the instructions below, particularly when it comes to setting the limit order.

How to Make the Trade:

• Trade: Sell to open the October 19, 2018, $13 put option on General Electric (NYSE: GE).
• Symbol: GE181019P00013000
• Limit Order Price: a credit of $0.60 or more.

Tell your broker: “I want to sell a put on General Electric stock. Specifically, I want to ‘sell to open’ one $13 Put that expires on October 19 for a credit of $0.60 per share or more.”

Note: Sell one put for every 100 shares of General Electric you would be pleased to buy at $13 per share. Investors should set aside $1,300 per contract sold to buy the stock in case the option expires in the money.

Further Instructions Regarding the Trade:

• • If the option price changes, you can adjust our recommended limit based on the midpoint of the bid/ask spread, which you should be able to see when entering the trade. Just make sure the potential credit is at least equal to the Limit Order Price specified above.
  • Place your limit order on a “good ’til canceled” (GTC) basis and be patient.