Analyst Says GE Could Be Worth Only $5...

"The worst might not be over for General Electric.

Despite GE's (GE) 2019 stock surge, Gordon Haskett analyst John Inch believes the company's cash flows are likely to remain 'extremely challenged.'"

GE Weekly Chart

TAOST Select Data

Short Interest

I would expect short interest to be much higher as a percentage of the float given the stock's structure... But it makes sense... the stock has bounced from its $6.66 52 week low over the last 6 weeks.  High short interest is like jet fuel to the upside... without it I feel even better about the short idea.

How To Trade It

GE Daily

Short The Stock

Of course you could short the stock on a good signal to the downside... Perhaps wait until price breaks the low of the preceding week's candle and short the stock outright.

Trade The Options

I think the better idea is to buy January 2020 Puts (options contracts that climb in value if the underlying stock falls) when the chart gives a good signal.

As the chart above (courtesy of Yahoo Finance) shows, you could purchase a single $3 strike contract for $8.00.

Yes... you read that right... on Friday afternoon, $3 strike January 2020 put options could have been purchased for $.08 each (a contract represents 100 shares of the underlying).

The closer $5 strike puts could have been had for $27 per contract.

My point here is that if you believe the analyst (and agree with the chart), $GE could certainly see $5 or below.  This is a relatively low risk way to get exposure to that idea.

Full disclosure... In my mind, $GE still has a good business... lots of them in fact.  I have a really hard time imagining the stock falling through $5.... 

But that's gut feeling.

One of my rules is "Trade what you see... not what you think."

I suggest you do the same.