Dykstra's Deep-in-the-Money Call: Citigroup - TheStreet

Dykstra's Deep-in-the-Money Call: Citigroup

The bank appears to have found a bottom and it has a plan to get its profits back in line.
Author:
Publish date:

Down doesn't necessarily mean out. That is a point I have tried to emphasize in my columns throughout the years.

No one exemplifies this better than Jon Lester. Lester is certainly not a household name, but his story is a great one. The 24-year-old lefty pitched the first no-hitter in the Bigs this season last night, topping the Kansas City Royals by a score of 7-0.

Lester, who pitches for the Boston Red Sox and won the final game of the 2007 World Series, survived large cell lymphoma in late 2006. It is now in remission. Lester is a winner and didn't let his difficult circumstances stop him from climbing to the top.

This is a great story that applies to sports, life and the markets.

Today I'm going with

Citigroup

(C) - Get Report

. The company is a heavy hitter and one that has gotten knocked around in the last few months.

Things have been so bad for the company, it is trading at its lowest levels in almost a decade. In fact, it hit its 52-week low of $17.99 in mid-March and is still trading well below its highest point ($55.53) in the last year. It closed at $22.99 on Monday and is off 58% in the last year.

Even with all its subprime problems, it's hard to believe we can grab shares of Citigroup at such a steal, but now is the time to get in this game.

Like many banks, Citi was badly hurt in the subprime crisis. It has had to write down more than $40 billion in losses over the last year. So far Citi has raised in excess of $44 billion in order to help shore things up.

However, the good news is that Citi appears to have found a bottom and it has a plan to get its profits back in line. Recently, CEO Vikram Pandit announced major plans to restructure the company and improve its bottom line.

Pandit said the bank wants to cut between $400 billion and $500 billion from its $2.2 billion balance sheet in various areas over the next three years. Those areas include "legacy assets," as well as its securities and consumer banking areas.

The blood-letting has been underway. Among other trimming, the company said yesterday it would stop offering some new mortgages and personal loans in the U.K. The move could cost up to 700 jobs.

Plus it's got $922 billion in the bank.

The company's plan makes sense to me and even though its stock has been sent to its room, I am still a fan. That's why I am placing an order to buy 10 contracts leaping all the way out until January 2009. I will place a limit order at $4.60 or better for the $20.00 (VRNAD) calls. Going that far out should allow us plenty of time to lock in a win. Don't forget that if the order is filled, I will place a good-till-cancel (GTC) sell order $1.00 above the fill price.

Always Remember: Life is a journey, enjoy the ride!

Know What You Own

: C operates in the financial services industry, and some of the other stocks in its field include

Bank of America

(BAC) - Get Report

,

Deutsche Bank

(DB) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

. These stocks closed at $36.10, $117.83 and $45.99, respectively. For more on the value of knowing what you own, visit TheStreet.com's

Investing A-to-Z

section.

At the time of publication, Dykstra had no positions in stocks mentioned.

Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."