Investors can shield or at least mitigate short-term fluctuations and the upcoming earnings release by using volatility to their advantage. For example, the June $40 strike price call options are trading for about $6.85 and are in the money $6.55. That results in a time premium cost of 30 cents, or less than an average of 2 cents per day.

Anything above $46.85 at the time of expiration is profit. But if the wheels fall off the cart and the shares nose-dive, the total amount of risk is $6.85, not the $46.55 amount at risk for shareholders.

Delta is the amount of change in the option price in relation to the underlying price. Delta will increase if Citigroup's shares rise in price, resulting in an almost one-for-one increase. In other words, using this option provides a large proportion of upside, while protecting your downside.

Investors willing to add one more leg to create what's known as a bull debit spread can almost eliminate time premium cost by selling a May $52.50 call against the $40 call. A spread strategy limits the profit potential to $5.94 ($52.50 - $40 = $12.50 - $6.85 (cost of option)= $5.65 + .29 (premium from selling $52.50 strike) = $5.94).

Using this spread strategy means anything above $46.56 is profit up to $52.50, for a possible 80% gain off of $6.56 at risk in less than 80 days.

At the time of publication the author had no position in any of the stocks mentioned.

Follow @RobertWeinstein

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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