Filed under: Analyst reports, Bad news, Management, Citigroup Inc. (C), Options, Technical Analysis
CNBC’s Jim Cramer is appalled at Citigroup’s (NYSE: C) latest hedge fund move, and calls the current leaders “the worst management team [he has] ever seen.” Cramer believes Citigroup now has more exposure to all bad karma in the financial world than any other bank, and he blames the board for falling asleep on the job, or just plain not caring. If you are inclined to agree, then it could be a good time to get into a bearish hedged trade on Citigroup.
After hitting a one-year high of $57.00 in December, the stock has struggled lately, dropping sharply in July and August. This morning, C opened at $45.89. So far today the stock has hit a low of $45.50 and a high of $46.20. As of 11:05, C is trading at $45.70, down $0.31 (0.7%). The chart for C bearish but improving, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.
If you agree with Cramer, then for a bearish hedged trade, I would consider a December bear-call credit spread above the $55 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverages nice returns. For this particular trade, we will make a 5.3% return in less than 4 months as long as C is below $55 at December expiration. Citigroup would have to rise by more than 20% before we would start to lose money.
Continue reading Cramer talks tough on Citigroup (C), but is he right?
Permalink | Email this | Comments
Entries (RSS)