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OIB Trade Alert: BAC, C

Friday’s rally took Bank of America (BAC) and Citigroup (C) beyond our calls’ strikes and we were called out of our shares with large net debits.

As I mentioned last week, Citigroup reported better-than-expected results on Friday. Today, Bank of America reported mixed results. Second-quarter revenue increased 6% year over year while profits declined 32% during the same period. But the stock is up today on an upbeat forecast, with management saying it expects net interest income to increase by as much as $1 billion this quarter.

I am recommending puts to sell on both stocks. The income we generate will reduce our net debit on the positions. However, you can enter today’s trades even if you were not in the previous ones. Just be aware that we will be managing and tracking them based on the ongoing positions.

BAC

Current Stock Price: $32.46

Net Debit: $10.37

Action: Sell to open the BAC Jul Week Four (7/22) 32 Put

Current Option Price: $0.35-$0.36

Recommended Limit: Set your initial limit order at $0.35, but adjust as needed to sell a put today

New Net Debit: $10.02

Expiration: After the close on Friday, July 22

Potential Rate of Return: I am targeting breakeven for this position

C

Current Stock Price: $50.26

Net Debit: $16.92

Action: Sell to open the C Jul Week Four (7/22) 49 Put

Current Option Price: $0.41-$0.43

Recommended Limit: Set your initial limit order at $0.42, but adjust as needed to sell a put today

New Net Debit: $16.50

Expiration: After the close on Friday, July 22

Potential Rate of Return: I am targeting breakeven for this position

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