by Steven Sarnoff
Today was the worst day of the year for stocks, but not too shabby for OPTIONS HOTLINE subscribers. The Superleverage power of my method was on display, as our recommended Citigroup May $60 put, triggered 03-20-17 at $2.00, traded 03-21-17 at $3.30, +65% in 1 day, on a 3% move in the underlying shares, with an always known and strictly limited risk!
On Sunday, 03-19-17, I emailed my readers, “Professionals have seen the recent sector underperformance and are fading the financials. Some may call that crazy, but it may just end up being crazy like a fox.”
Here’s an excerpt from my specific option recommendation, “…the big bank enjoyed a rocket run from the election to year’s end. But since then, shares have really gone sideways. The appearance of a negative candle line at the top, along with Friday’s close below the 20-day moving average, has me looking for a move lower over the weeks ahead.”
You can see the action in today’s daily candlestick chart of Citi:
The option recommendation was triggered at $2.00, on Monday’s opening, with Citi at $60.10, and traded Tuesday at $3.30*, with Citi at $58. At a share price above $60, the price (or premium) for the recommended put is made up entirely of time value (time plus volatility). Each dollar below $60 adds $1.00 of intrinsic value to the $60-strike put.
I’m targeting a move toward $55, at which point the $60-strike put option would have $5.00 of intrinsic value and subscribers would have more than multiplied their money. If Citi is at or above $60 on the third Friday in May, the option will expire worthless. That is the risk.
I can’t guarantee that all my recommendations will reach multiplier status, but, in my 18th year at the helm, I promise to continue to do my best each week to find option winners for my great subscribers.
If this is the type of options action you are looking for, subscribe today to see how we keep our readers a step ahead of the crowd.
*Update: Wednesday’s early trading saw follow-through selling take Citi down to support at $57, where our recommended option traded $395 bid at $415, +98% in 2 days on a 5% move in the underlying shares, with an always known and strictly limited risk!