Don't Buy Citi, Buy Calls on Citi

If you are considering owning Citi at these depressed prices, consider buying a March 5 Call option for $1.29. Of course, you only make a profit if Citi goes above 6.29 before March, but it also caps your downside at $1.29. Given the possibility the shorts are right and Citi is insolvent, this may be a smarter bet. If they are wrong at Citi returns to the $9 price target that several analysts have, you will have a 300% return.

Update: 11/25, 10:43PST Good time to cover this trade for a 95% profit. Sell your March 5 calls on Citi for $2.46. They were purchased Friday for $1.29.