Unusual Options Update on CIT Group (CIT)

Back on June 25, 2014 we wrote about a large unusual opening call buy in CIT Group.   On that day a smart money trader bought 1,700 plus October $48 calls at 97 cents.

At the time CIT was trading over $45, so this “smart” money trader isn’t looking too smart today, with CIT Group (CIT) trading at $43.62 today, down 12 cents.

Those October $48 calls that were bought for 97 cents are now bidding 33 cents and asking 43 cents.

There are a couple interesting things about this trade.

1) you can copy it for much less than half the cost of the smart money.  You could try putting a bid in at 39 or 40 cents, and you’ll likely get it filled

2) You have lots of time on your side as the options don’t expire until October 18th.

3) Most interesting is that this smart money bought well in advance of earnings, but you can now get the same options for far less, and earnings will be announced tomorrow morning.  If it is positive, and the price pops, you can get out with at least a double, long before the smart money even makes a profit.

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Now, of course you have to keep in mind this a binary trade now.  If earnings rock, you make serious bank.  If earnings fizzle, you either lose it all, or wait a few months with a hope and a prayer that it’ll recover by October.

Definitely not for the faint of heart, but we kind of like CIT Group (CIT) for a little lotto ticket.  Good luck!