On Friday’s CNBC’s Options Action, the crew analyzed the financial sector’s performance since the election. Financials have rallied significantly since the election and has consolidated within a very tight range over the last 5 weeks. Looking at historical performance, a long consolidation period after a strong rally has usually been coupled with a selloff afterwards. Looking at Citigroup, which has larger FX exposure than it’s rivals coupled with a relatively high implied volatility provides a good setup to sell options. Looking for C to stall or move lower, Michael Khouw suggested selling a Mar 60/62.5 Call Spread for a $1.00 Credit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: CNBC Options Action