C Analysis

Citigroup Inc. (C)

Update 11/1/2018I’ve exited C the day before the stock went ex-dividend, with the goal of avoiding potential assignment.

The cost of exiting was a $3.65 debit, producing a loss of $20 per contract, with shares at $65.65, down $3.45 from entry.

Shares declined by 5.0% over 21 days, or a -87% annual rate. The options position produced a -5.5% loss for a -95% annual rate.

I have entered a short iron fly position on C, using options that trade for the last time 37 days hence, on Nov. 16. The premium is a $3.45 credit per contract/share and the stock at the time of entry was priced at $69.10.

I made the decision to enter the trade in my account to coincide with a publication of earnings on Friday, Nov. 12, before the opening bell.

The profit zone for this position is between $73.45 on the upside and $68.45 on the downside.

Implied volatility stands at 32%, which is about the same as the VIX, a measure of the volatility of the S&P 500 index. C’s IV rank stands at 75%.

The price used for analysis was $69.51.

Premium: $3.45 Expire OTM
C-iron fly Strike Odds Delta
Long 75.00 84.4% 18
Break-even 73.45 74.7% 24
Short 70.00 58.7% 45
Short 70.00 41.5% 54
Break-even 68.45 74.0% 23
Long 65.00 68.8% 27

The premium is 69% of the width of the position’s wings. The risk/reward ratio is 0.4:1.

The bid/ask spread was 2.6%.

By Tim Bovee, Portland, Oregon, Oct. 11, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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