Jim Cramer sounded the bullish horn on Citigroup (NYSE:C) Tuesday night, telling his Mad Money viewers that the beleaguered banking name is “the most undervalued bank in America.” The CNBC host also said Citi “remains my favorite speculation [stock].” Cramer did add the caveat that investors will need to be patient, as the stock probably won’t really begin to show strength until the U.S. government is finished selling off its C shares.
C shares haven’t traded above $10 since November 2008 (amid the financial market meltdown) and have barely peeked above the $5 level since January 2009. The company is still keeping afloat, however; its last two earnings reports have been profitable. What’s more, Citi’s mid-July earnings report topped expectations by four cents, or 80%.
We have outlined two option strategies below, one for investors who are in Cramer’s bullish camp and one for those who expect Citigroup’s range-bound price action to continue. For the bulls, we have a long-term call and for the bears, a put ratio spread.
These are not trading recommendations, merely examples of different strategies for educational purposes. The prices are taken as of Wednesday afternoon, when C shares were trading at $3.68, down three cents on the day. For a full dissection of the strategies including profit/loss information, continue reading. (more…)
As everyone knows, most investors continue to use stocks (as opposed to options) for their primary investment tool. Although options volume continues to grow each year, there are still a lot of people who do not understand what all the fuss is about. Well hopefully, I can give you a quick rundown of the reasons investors should be versed in both stock and options strategies. By “versed,” I mean educated in how options work and the potential benefits (and risks) they provide when used correctly. I do not mean, “just try and figure it out by making real trades without knowing what you are doing.”
The markets are looking fairly strong this morning after data showed consumer spending of personal income was basically flat compared to the prior month. This, in addition to a slower savings rate among Americans and a flattish reading on inflation, seems to be having a soothing effect on the market.
At the risk of sounding like a broken record, it’s been another low volatility morning in the markets. All the major indices have been fluttering around unchanged and looking a bit tired as volume remains relatively low.
