Another Citi Update

by Dan July 12, 2011 2:45 pm • Commentary

7/12 Update

I’m taking off another 1/4 of the original trade, just sold more of the put spread for .65.


Last Update

On Friday I wanted to make a low premium near the money short term bearish bet on Citi into this weeks earnings on expiration.  I paid .21 for the July 41/40 Put Spread.  

-The stock is down 5% today and one of the worst acting banks in today’s market rout….one of the reasons for this under-performance could be the very reason that lead me to the short to begin with….the stock’s out-performance over the last few weeks.

I just sold half my put spread at .58 when the stock was 39.95…I am locking in a .37 gain and now I can’t lose money on my remaining portion….I will let this ride into earnings a look to realize the full value of the spread.

Original Post July 8th 2011:

Citi $42.10

-Report Earnings July 15 at 8am.

-implied move in Options market about 4% vs 8 qtr avg of  ~3%

-I think there is a good chance if the market retraces some of the last 2 weeks rally that C (which is up 15% off of the June lows) should be weak into the earnings announcement as investors take a more cautious stance into what is likely to be a sloppy report and outlook.

– I want to make a low premium tactical trade into the event while also defining my risk.


TRADE: Buy July 41/40 Put Spread for .21

-Buy July 41 Put for .40

-Sell July 40 Put at .19

Break-even on July Expiration:

Btwn 41 and 40.79 lose up to .21

Above 41 lose all .21

Btwn 40.79 and 40 make up to .79

Below 40 make full .79.

Check back later for some more commentary on Citi.