One of the more challenging, yet potentially rewarding, types of option trades
is trading around either a long position or no position in a stock thats about
to report earnings. Many investors tend to stay away from earnings season, as it
can be a bit more volatile than they care to try to stomach. But not only is
this a great time to make directional plays (by buying calls or puts), you also
have the opportunity to put cash in your pocket now and come out a winner either
way whether the underlying stock moves (much) or not. I like those kinds of
odds! As we head into another earnings season, here are five options trades that
could offer fast profits on three big-name stocks. Trade #1 Sell Citigroup Puts
Citigroup (NYSE: C ) has potential in the long run, or so thinks hedge fund
manager Bill Ackman, who holds a huge stake in Citi. The stock is trading well
below what he (and I) believe is where it should be trading. Citi closed right
at $30 on Tuesday, so if you dont hold it and youd like to because its a value
play, I say sell the C Feb 30 Put for $1.75. Thats almost a 6% premium to take
the risk, which is much higher than what I usually target. Trade #2 Sell
Citigroup Covered Calls For those who are long Citi and are concerned about its
upcoming earnings report and want to hedge their bets, the C Feb 30 Calls are
also going for $1.75, so youll get 6% downside protection while collecting that
premium. Just dont sell calls without owning the underlying stock the risk
usually isnt worth the reward, no matter what the underlying stock is. For this
Citi trade, you can buy the shares and sell the calls, or simply sell those C
Feb 30 Puts instead. Trade #3 Sell Google Puts I like option trades on Google
(NASDAQ: GOOG ) because I believe the company is still in its infancy of world
domination. Its simply the most innovative, amazing technology play in existence
outside of Apple (NASDAQ: AAPL ). If you dont own Google but love it right here
at the $623 stock price, then sell the GOOG Feb 600 Puts for $15.40. Thats a
fantastic income stream of $1,540 per contract. And if Google sells off after
earnings, youre effectively in at $585. And if not, youve just collected a nice
paycheck. Trade #4 Sell Google Calls For those who own Google and think it has
had its run and want to generate some coin off of it without giving up too much
upside, sell the GOOG Feb 645 Call for $16.50.
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