Citigroup - trade idea

[MrSer]

Its going to be in the teens before April 18th. I've made over 110% in two days I'm not trying to brag, but with puts its hard not to make money with this stock. This stock will go a lot lower you don't have to buy anything just trying to help you guys out.

Currently holding
April 20 puts brought @ .65 each 1.07 by 1.11 last trade 1.12
may 25 puts brought @ 3.80 each currently 4.80 by 4.90 last trade 4.65

Good luck guys

[john_for_u80]

Its going to be in the teens before April 18th. I've made over 110% in two days I'm not trying to brag, but with puts its hard not to make money with this stock. This stock will go a lot lower you don't have to buy anything just trying to help you guys out.

Currently holding
April 20 puts brought @ .65 each 1.07 by 1.11 last trade 1.12
may 25 puts brought @ 3.80 each currently 4.80 by 4.90 last trade 4.65

Good luck guys

Why not buy SKF? I got in SKF couple days back & sold yesterday.

C, LEH, BAC, JPM are in SKF short list.

C & LEH are screwed.

http://news.yahoo.com/s/nm/20080329/bs_nm/marubeni_fraud_dc;_ylt=Ar9ojodxvWxNheNo3G9ku2ys0NU E

-S&P is in downtrend,
-Finincials earnings going to start,
-FED/Government is trying to hold the market & make new bottom where it is now,
-XLF has support at 22-24,
-banking stocks are moving down towards the support.

Its little confusing, waiting as what happens early next week.

Anyway, SKF is the best bet.

GL.

[MrSer]

I'm holding some skf also and i have puts on xlf.

[zozozo333]

I've been doing well on Citigroup puts the last two months. The only problem I have is when it has a +5% day and a series of up days and that sets me back a little. I need to learn to sell and buy it back cheaper later on.

[MrSer]

I sold off my other puts before the fed meeting and brought calls did well and I even surprised myself. Every week their estimates get lower and lower. Whitney is right and I won't be surprised if they cut the dividend.

[nedfromsaltmarsh]

I have a feeling that C is going to be one of the better dow performers by year's end.

[MrSer]

I have a feeling that C is going to be one of the better dow performers by year's end.

Citigroup is in the S&P. I am not holding my puts till the end of they year I have april and may ones.

[nedfromsaltmarsh]

?

So C is not one of the 30 that make up the DJIA...???

[aiki14]

C is in the DJIA, and the S&P

[MrSer]

Guess we both are right lol.

[nedfromsaltmarsh]

Up almost 10% today (as of post)

I've been slowly nibbling at this stock as it's declined over the last 6 months and I even double-downed when it hovered around 18 a couple of weeks ago, hoping that it had finally bottomed.

Barring any catastrophic event I honestly think that this will be a $35 dollar stock by year's end.

[zozozo333]

So what do you think about C options now? You gonna get more puts or wait it out? Sometimes I swear I should buy both the puts and calls and watch them seesaw back and forth. Haha

[aiki14]

So what do you think about C options now? You gonna get more puts or wait it out? Sometimes I swear I should buy both the puts and calls and watch them seesaw back and forth. Haha

Why not? What you're describing is a straddle, and it is a legitimate strategy if there is a lot of volatility. I use them around earnings reports or other news likely to move the stock price one way or another but where I can't be certain of the direction. Occasionally wild swings will result in both sides being in the money within a day or two.

[zozozo333]

Why not? What you're describing is a straddle, and it is a legitimate strategy if there is a lot of volatility. I use them around earnings reports or other news likely to move the stock price one way or another but where I can't be certain of the direction. Occasionally wild swings will result in both sides being in the money within a day or two.

Hm, I forgot about that. I guess there really is truth in every joke! Do you have a strategy towards straddles? I'd imagine if there's enough time before expiration, I could sell out whenever each side makes me enough to close it out. On the other hand, if it's close to expiration and earnings come out, one side could become worthless while the other is worth more, but would it be worth it? I hope that made sense.

[aiki14]

Hm, I forgot about that. I guess there really is truth in every joke! Do you have a strategy towards straddles? I'd imagine if there's enough time before expiration, I could sell out whenever each side makes me enough to close it out. On the other hand, if it's close to expiration and earnings come out, one side could become worthless while the other is worth more, but would it be worth it? I hope that made sense.

Exactly correct, you have it. The strategy is to use them when you expect large movement but don't know the direction, earnings is a good example. If a company missed earnings this past quarter you could see 20% moves in a day down and if it surprised to the upside (not too many this Quarter) 20% up, if the straddle costs 10% of the stockprice, you get the 10% upside plus leverage. then news and market forces could move the other side into the money or just up to a profit, adding to your upside.

[zozozo333]

Exactly correct, you have it. The strategy is to use them when you expect large movement but don't know the direction, earnings is a good example. If a company missed earnings this past quarter you could see 20% moves in a day down and if it surprised to the upside (not too many this Quarter) 20% up, if the straddle costs 10% of the stockprice, you get the 10% upside plus leverage. then news and market forces could move the other side into the money or just up to a profit, adding to your upside.

One other thing... When you use a straddle, would you spend the same amount of money on puts and calls (I suppose one could spend more on one side if there's a good reason)? Would you buy the same strike price on both sides, or choose a strike price just out of the money for each side? I should just buy the opposite of what I conclude since usually that's what happens 8O, with the exception of Citigroup until just recently.

[rocko]

Its going to be in the teens before April 18th. I've made over 110% in two days I'm not trying to brag, but with puts its hard not to make money with this stock. This stock will go a lot lower you don't have to buy anything just trying to help you guys out.

Currently holding
April 20 puts brought @ .65 each 1.07 by 1.11 last trade 1.12
may 25 puts brought @ 3.80 each currently 4.80 by 4.90 last trade 4.65

Good luck guys

What is your contingency plan if IV implodes on you or if the market keeps rallying like it's about to do?

[Florida]

If you buy a strike just out of the money on each side, you are now doing a strangle, not a straddle, same principal, just a different name.

I have found that due to the volatility premium in options preceeding a known catalyst, (like earnings), you really have to have a big move to make a straddle or strangle pay off. For example with MOS yesterday, had you placed a straddle at the April 105 strike at the close on Thursday, you would have just about broken even on the trade with about a 107% profit at max on the call and a 78% loss on the puts on the same trade, this is on an almost 12% max move in the stock. Once you factor in slippage and commissions, you would have done good to just break even on the trade.

Granted, you could have sold the call at the max, and hold the put to see if it comes back to you at all, and maybe make a little on it, but with only 2 weeks to expiration, chances are slim.

Bottom line, in my experience, unless the move on the stock is totally unexpected and very extreme, straddle and strangle plays don't work on earnings plays.


QUOTE=zozozo333;100616]One other thing... When you use a straddle, would you spend the same amount of money on puts and calls (I suppose one could spend more on one side if there's a good reason)? Would you buy the same strike price on both sides, or choose a strike price just out of the money for each side? I should just buy the opposite of what I conclude since usually that's what happens 8O, with the exception of Citigroup until just recently.[/QUOTE]

[netwrangler]

If you buy a strike just out of the money on each side, you are now doing a strangle, not a straddle, same principal, just a different name.

I have found that due to the volatility premium in options preceeding a known catalyst, (like earnings), you really have to have a big move to make a straddle or strangle pay off. For example with MOS yesterday, had you placed a straddle at the April 105 strike at the close on Thursday, you would have just about broken even on the trade with about a 107% profit at max on the call and a 78% loss on the puts on the same trade, this is on an almost 12% max move in the stock. Once you factor in slippage and commissions, you would have done good to just break even on the trade.

Granted, you could have sold the call at the max, and hold the put to see if it comes back to you at all, and maybe make a little on it, but with only 2 weeks to expiration, chances are slim.

Bottom line, in my experience, unless the move on the stock is totally unexpected and very extreme, straddle and strangle plays don't work on earnings plays.
Totally agree with your 'bottom line' assessment.

The 'helluvit' is that even if you take the other side of the trade, and sell the straddle/strangle, you are still fighting the 'spread'.
These options market makers aren't in business for fun and games.
Any option play needs to have enough MoJo to cross the spread.
Otherwise, you're just contributing to the income of the market makers [and, of course, your broker].

All that said, there are still 'opportunities' for a straddle/strangle.
Well, it's much better if you have an idea as to which way the stock will go.
Picking a direction cuts the 'spread' problem in half.

But the whole thing comes down to DD.
If your Due Diligence research identified an 'opportunity', you may have a valid straddle/strangle play - even better it you can identify a direction.
If you don't have DD to back your play, then you are fighting 'house odds'.
You are now in the losing 'twilight' zone that Florida is talking about.

[Seamus]

Those with puts on "C" looks like the right call: US Banks Citigroup and Merrill Lynch reveal fresh 15 bn loss (13 April-2008) (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3671568.ece)

Every quarter this bank still doesn't have a clue what they owe! And this news should help out the rest of the market!

[MrSer]

I have a lot of xlf april 25$ puts it made up for these options, but i think it was just hedge funds looking for a short squeeze last two weeks. Personally i think august 24$ puts for xlf are good.