I am recommending we roll our Citigroup (C) call out two weeks and to a lower strike price to generate more income and reduce our cost basis on the position.
Note that the bank is scheduled to report earnings on Oct. 14, which is the new call’s expiration date. Depending on how the market is behaving and Citigroup is trading, we may temporarily exit the position to avoid earnings risk.
Current Stock Price: $43.16
Current Cost Basis: $64.91
- Buy to close the C Sep Week Five (9/30) 50 Call for around $0.02
- Sell to open the C Oct Week Two (10/14) 45 Call for around $0.91
- Set your initial credit limit at $0.89, but adjust as needed to roll today
New Cost Basis: $64.02
Expiration: After the close on Friday, Oct. 14
Potential Rate of Return: I am targeting breakeven for this position