The current ratio of calls to puts on BAC and CITI implies that buying BAC and other banks may be profitable in the short run.

2. THE CURRENT RATIO OF CALLS TO PUTS
ON BAC AND CITI IMPLIES THAT BUYING
BAC AND OTHER BANKS MAY BE
PROFITABLE IN THE SHORT RUN.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

3. ONE OF THE CUES THAT INVESTORS CAN
USE IN PICKING STOCKS FOR SHORT TERM
INVESTMENT IS ACTIVITY IN THE OPTIONS
MARKET.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

4. ALTHOUGH CALLS ON CITI OUTNUMBERED
PUTS BY ONE AND A HALF TO ONE THE
CALL TO PUT RATIO OF BANK OF AMERICA -
BAC, WAS CLOSER TO FIVE TO ONE. THIS
RATIO IMPLIES THAT OPTIONS TRADERS
ARE EXPECTING THE PRICE OF THE BANK
STOCKS TO GO UP.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

5. RATHER THAN BUYING BAC AND OTHER
BANK STOCKS, OPTIONS BUYERS SIMPLY
PURCHASE A CONTRACT WHICH GIVES
THEM THE RIGHT TO BUY THE STOCK, IN
THE CASE OF A CALL, OR SELL THE
STOCK, IN THE CASE OF A PUT, ON OR
BEFORE THE EXPIRATION OF THE OPTIONS
CONTRACT.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

6. BECAUSE STANDARD OPTIONS CONTRACTS
ONLY RUN FOR A FEW MONTHS, OPTIONS
TRADERS TYPICALLY DO NOT DEAL WITH A
LONGER TIME HORIZON. ANYONE BUYING
BAC AND OTHER BANK STOCKS BASED ON
THE CURRENT PUT TO CALL RATIO NEED TO
KEEP THIS FACT FIRMLY IN MIND.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

7. FOLLOWING THE PUT TO CALL RATIO IN
THE OPTIONS MARKET CAN BE A GOOD
MEANS OF PICKING NEW WINNERS BUT IT
DOES NOT TELL THE LONG TERM INVESTOR
WHAT THE PICTURE WILL BE NEXT YEAR
OR IN A DECADE.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

8. OVER THE LONG TERM INVESTORS NEED
TO APPLY FUNDAMENTAL ANALYSIS TO
BAC AND OTHER BANK STOCKS IN ORDER
TO DECIDE IF THEY ARE LIKELY TO BE
PROFITABLE OVER THE YEARS.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

9. ONE OBVIOUS FACTOR IS THAT THESE
STOCKS HAVE BEEN BEATEN DOWN
DURING THE RECESSION AND ARE
SUFFERING FROM OTHER FACTORS SUCH
AS LAWSUITS BY THE US GOVERNMENT
REGARDING THE NATURE OF MORTGAGES
THAT THEY SOLD TO FREDDIE MAC AND
FANNIE MAE.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

10. IF THE ECONOMY DOES NOT RIGHT ITSELF
AND THINGS DO BADLY FOR THESE BANKS
THEY COULD GO BANKRUPT, NEED TO
RESTRUCTURE, AND BECOME LONG TERM
LOSING PROPOSITIONS.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

11. ON THE OTHER HAND THE CURRENT
DISMAL MARKET MAY HAVE UNDERPRICED
THESE STOCKS.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

12. THUS, BUYING BAC AND OTHER BANK
STOCK IN THE SHORT TERM COULD BE
PROFITABLE IN THE SHORT TERM.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

13. AN ALTERNATIVE TO USING OPTIONS AS A
CUE TO BUYING BAC AND OTHER BANK
STOCKS IS BUY CALL OPTIONS ONE’S SELF.
INVESTORS CAN PURCHASE OPTIONS ON
BLOCKS OF 100 STOCKS, PAY THE
CURRENT PRICE FOR THE OPTIONS
CONTRACT, AND THE PURCHASE THE
STOCK AT A NICE DISCOUNT IF GOES UP ON
PRICE.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

14. SOME OF THE BEST STOCK INVESTMENT IN
A DECLINING MARKET CAN BE SCOUTED
OUT BY WATCHING THE OPTIONS MARKET.
IF AN INVESTOR BUYS CALL OPTIONS ON A
STOCK LIKE BAC HE ONLY STANDS TO LOSE
THE PRICE OF THE OPTIONS CONTRACT IS
THE STOCK TAKES A NOSE DIVE.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

15. HE IS ESSENTIALLY TAKING OUT
INSURANCE AGAINST A FALL IN STOCK
PRICE. ON THE OTHER HAND, IF THE STOCK
SOARS IN PRICE, HE WILL EXECUTE THE
OPTIONS CONTRACT AND PURCHASE THE
STOCK AT THE CONTRACT PRICE, KNOWN
AS THE STRIKE PRICE, NO MATTER HOW
HIGH THE PRICE MAY HAVE RISEN.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

16. FOR MORE USEFUL INFORMATION AND
TIPS ABOUT STOCK INVESTING
PLEASE VISIT
WWW.PROFITABLEINVESTINGTIPS.COM