Jon Najarian bought options and shares in General Electric Monday. He explained that stocks usually trade lower on the announcement of a dividend cut, but they rally to a break even on the day of the cut. He didn't want to wait for the stock to drop to $20, so he bought a half of the position Monday.
Sarat Sethi is a shareholder of General Electric, and he thinks it would be good for the stock if the dividend cut happens because it will give the company the financial flexibility. He added that the market has already priced in the discount of the dividend. If the stock drops below $20, Sethi is going to buy more. He thinks the stock is going to trade sideways of slightly higher, but it might not rebound until the end of the year.
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