Thursday, August 18, 2011

Trade of the Day: Citi (C) January $35/$42/$49 call butterfly spread

The Trade
Trader executed January $35/$42/$49 call butterfly spread 25,500x for a maximum risk equal to a $.95 debit, $2,422,500 total. Profit potential is limited to $42, a gain of over 50% at current levels, $15,427,500 total.

Trade is bullish, looking for a bounce to prior levels. First break-even is $35.95. Shares finished the month of July at $38.34, but suffered substantial losses, down 21.9% month-to-date. Chart above highlights first break-even with the lower line and maximum profit potential with the higher line.

The January $42 call traded over 54,000 contracts and is the most active.*

Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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