As stated in my last article, 3 Dow Stocks to Buy-Write NowI believe financials will outperform the market in the early part stock this year. The most attractive financial options to me is Citigroup NYSE: I believe Citigroup will outperform outperform the market and the very popular Financial Sector SPDR ETF NYSEARCA: Below, you will see a chart from Google Finance comparing many of the largest financial stocks as well as XLF. We can see many of the financial stocks such as Goldman Sachs NYSE: GS and JP Morgan NYSE: JPM lagged the Financial Sector ETF in the last year, while Wells Fargo NYSE: This isn't necessarily because the companies are better than one another, but it is options that lower priced stocks typically outperform higher priced stocks in an uptrend and vice versa. With that being said, and financials set to outperform, I want to own higher beta financials - therefore, I choose Citigroup. This, however, is not the only reason I would choose Citigroup. As you can see from the chart above, the technicals on Citigroup are quite attractive. The stock has been rallying on increasing volume. You can see the on balance volume green dashed line is actually leading and breaking out to new highs as well. Granted, it is a bit skewed by December 7, which happens to be the day the government sold their massive stake; the trend was still increasing before then. In this article, I will detail an option strategy which is like owning the shares synthetic stock option position. Normally, synthetic stock positions use the same expiration month, but I am choosing two different expirations to make up my strategy. This is simply because I think Citigroup will increase faster sooner rather than later. As stated, I believe financials will outperform the market in the first half of this year, so I am choosing expirations no later than June. However, I am willing to take more shares, so this strategy fits my outperform profile. I am choosing this over owning shares mainly because it gives me the shares at a discount to options, but also because it allows me to leverage my position in Citigroup. As much as I dislike selling puts in a low volatility market, I believe selling them combined with buying calls is a good entry point in Citigroup stock. The ideas outlined above are bullish strategies and should not be considered if you think the stock will sell off in the near future. However, if you feel the stock could move higher in the near future, this strategy could yield a nice gain. The reason option volumes have surged in the last stock years is because they are a great way to hedge your portfolio, outperform well as create income off of your shares see chart here. Keep in mind when using this strategy that it is essential that broker commissions are low enough to profit from the position. I am long C. Long Ideas Short Ideas Cramer's Picks IPOs Quick Picks Sectors Editor's Picks. Banking on Citigroup to Outperform: A Bullish Option Strategy Jan. Investing IdeasLong IdeasFinancialMoney Center BanksOptions. Want to share your opinion on this article? Disagree with this article? To report a factual stock in this article, click here. Follow Option Maestro and get email alerts.
Options Trading 101: Why Options Are Better Than Stocks
Options Trading 101: Why Options Are Better Than Stocks
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It is true they disagree with many things American say and do but it is also true they cannot help but to admire a country in which you can succeed on your own merits regardless your particular profile or situation.