General Electric (GE, $32.05, down $4.70) got punished Friday, falling 13% after reporting disappointing first-quarter earnings before the bell. Wall Street expected 51 cents a share and got 44 cents. There was no surprise in the sell-off, the surprise was that GE actually missed earnings. The kicker is that GE had reaffirmed as recently as last month that they would meet earnings.

GE’s got some good business’s and is a well diversified company. It’s got great “brand awareness” and is a cash cow. The sell-off has got many traders excited and I’m sure we’ll see some upgrades and buy recommendations this week. However, first-quarter earnings are getting off to a lousy start and GE could continue to struggle. Don’t buy into the hype and let’s see where GE is in a few weeks or a month from now.

Meanwhile, keep an eye on the January 2009 32.50 calls (VGEAY, $2.92, down $3.03) which dropped 50%. If GE stumbles below $30 these options may be worth a second look below $2.00.

Rick Rouse