Last Thursday I suggested taking a bearish shot into Citi’s earnings by Buying the C Apr21 weekly 4.5 Puts for .13…..well the earnings were out this morning and the stock is up (not really sure why) but as JPM and BAC before it I would expect the stock to sell off and close poorly….I am selling those Puts and will look to roll something longer dated as I did in BAC.
-Puts can be sold for .10, take small loss and I think you are safe to just short the stock here as the options are getting increasingly difficult to trade with the .50 strikes….
ORIGINAL POST FROM APRIL 14, 2011:
–Citigroup (stock 4.44) reports earnings Monday morning pre-open.
-Implied move about 4% vs the avg move over the last 8 qtrs of about 5.25%.
-Based on JPM‘s report, I think safe to assume that you will not get better results from C than you got from JPM, which is down almost 3% in a day since what wall street analysts thought was a very good showing.
-stock is down ~6% ytd under-performing JPM up ~7% and SPX which is up ~4.25% ytd.
–Wall Street analysts fairly mixed on the name with 16 buys, 9 holds and 3 sells, but average price target is about 5.50!
-Technically a break below 4.40 could have the stock down towards 4.00 if the commentary is less than stellar.
C (stock ref 4.44) BUY the Apr21 weekly 4.5 Put for .13
Break-even on Next Fri Expiration:
Downside: stock 4.37 or lower u make money, that is down 1.5%. stock btwn 4.37 and 4.50 can lose up to .13. Worst Case stock above 4.5 and you lose the .13 premium you paid.
If JPM can’t cut it, then C won’t either, and if you are Bearish like me and looking for low premium, dollar cheap option ways to express this view into events this is one way to do it……That said, C is a very fine company in the midst of a phenomenal turnaround from the brink. Full Disclosure: I bank with them and do Business with them, this is a very short term play into earnings.