Citigroup (C)
Citigroup:
- Beaten up lately, for good reason.. 48 -> 30 in the last 6 weeks
- Dividend still holds, though possibly not forever
- $200+ per share in assets
- It’s a huge bank, huge enough to survive it’s problems, even if they’re billion dollar problems
- 7.5 billion $ investment
- Layoffs
So I bought some Jan’10 30 calls for roughly 8. If I had a little more time to babysit the order, 7.5 would have been a better target.
Exit Strategy:
I have to hold for at least a month. But anyone following this can sell Dec or Jan calls against it to provide downside protection. I’d recommend the Dec 32.5’s right now, and the Jan’s of the same if we’re at this level post expiry. 30s should also be considered if we drop below 30.
Other than protection, this is a long term holding. I’d expect to make ~1 per month on average selling calls against it, while accumulating some longer term slow gains on the leaps. If the implied volatility dropped to such a level where I couldn’t sell calls for ~1.5 a month (expecting to lose a few, so ~1 on average for income) and the stock had recovered to a level fitting of it’s business, then I’d consider closing the position.
It’s also possible that C will drop further. If I can roll these options down to Jan10 25’s, for less than 1.75, then I’d do that as well ($5 improvement in strike for $1.75)
I expect to have this position through the end of 2008.