General Electric is one of the world’s biggest companies. In fact, they often go back and forth with Apple for being the world’s largest. However, a recent announcement made by GE looks like it will drop the price of the stock over the short term. They have made it known that they will be unloading their shares of the company Synchrony Financial, a company that they’ve been associated with since around the time of the Great Depression. Synchrony went public last year, and GE did own an 85 percent share within the company since then. GE is planning on unloading this, which isn’t in itself a bad thing, but they have stated that they will be offering shareholders the ability to trade every $100 of GE stock owned for $107.50 of Synchrony stock. The immediate buzz that this will likely create has led experts to believe that GE’s stock will see a sudden drop.
And while this is the perfect opportunity for short term traders to sell GE short or take out binary put options against it, over the long term, this looks like a move that will help GE more than anything. Synchrony is one of the new wonder children of the financial sector, but the sector is one of the slowest growing sectors in the market right now. It’s underperforming the S&P 500 at the moment, creating concern that it simply cannot do well if the market does pick up a bear trend.
The immediate concern is that 42 percent of GE’s profit last year came through its lending business. The company’s CEO has made it well known that he intends to rid the company of this completely and focus once again on the manufacturing roots that made GE what it is today. Since the market crash of 2008, this has put GE under tighter federal regulations and has held it back from being able to do many of the things that the company wants to do. This move might have a short term negative impact upon the company, but the overall prognosis is that it will help the company move upward with more ease over the coming years.
The official estimate it that once the dust settles, this move will raise GE’s price by about 8 or 9 cents per share. This is obviously a good thing for those that buy now at a discount, but there are two sides to this, and the short term relies upon traders acting fast to get their position and make a profit right away. This is why binary options are so popular, in part. You can act quickly on the news with binaries, all while establishing a long term position in the stock market. It avoids contradicting trades since you are acting in two different marketplaces and lets you maximize your profits at the same time. This is not the right strategy for all traders as it’s a little advanced, but it is a good example of some of the benefits that being open to new types of trading and strategies can bring you. In fact, other experts believe that this move could allow GE’s stock price to double over the next five years. This is a tough prediction to make, but if the financial sector really is hurting the company that much, unloading it now gives GE a ton of room for improvement.
During all of this, also pay attention to Synchrony. Their shares have already started going up quickly as people react to this announcement. If you are able to find a binary opportunity for this company, it could be worth looking at.