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Strategies & Market Trends : Gersh's Option trades
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To: Mark Johnson who wrote (622)11/5/2007 11:08:14 PM
From: Mark Johnson  Read Replies (1) of 652
 
Boring but interesting, Citigroup, had a high volume day today.
Not much action but the outlook does not look the brightest for them with a lot of uncertainty.

Not good for the upside in the stock, good news for the option call writers. The November 42.5 calls are bidding about 10 cents. Not a lot of premium but assuming that you have to front about $3,600 in cash for every 10 option contracts you short, you are looking at about 2.7% profit for less than 2 weeks of work.

A more risky play is to short the November 40 calls for about 25 cents, or about 7.2% profit before commissions, but I don't recommend the trade even though it should end up worthless, assuming you short the call options.

Shorting the 42.5 calls looks best. About 2.7% profit for 2 weeks or waiting. C is dead meat right now, no upside or major dead cat bounce foreseen any time soon. Look to cover if the stock breaks the $40.5 area.

Good luck option writers.
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