Playing penny options can be one of the best ways to capitalize on downside moves in distressed stocks.
Here's a simple example: What if you were alerted through a simple e-mail in October 2007 that Citigroup Inc. (C:NYSE) was about to get whacked?
The simple course of action would be to buy a put option on Citigroup stock. For example, you could have bought the Citigroup June 2008 42.5 Puts (C RV) in October for $4.75 per contract.
After a massive 52% fall on Citigroup stock, those penny put options contracts are trading for $21.15 per contract -- a gain on your end of 345
These kinds of opportunities are flooding the market these days.
What better strategy can you employ in a time when all major American benchmark indexes are continuing to fall in value?
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