As earnings season is starting to ramp up and the equity market seems to have calmed down for the moment, I was digging around this morning looking at trades in some of the stocks that report today after the close or tomorrow before the open.  A 1000 lot bull put spread in Citigroup (C) options caught my eye.

With C trading at 45.00 there was a seller of the C Jan 15th 45.50 Puts at 1.15 who bought the C Jan 15th 42.50 Puts for 0.20 taking in a credit of 0.95.  The payoff diagram appears below and we don’t have to wait long to see how this trade works out since these options expire tomorrow.  This trader will end up with a profit equal to the credit of 0.95 and is risking up to 2.05 if C closes at 42.50 or lower in reaction to tomorrow’s earnings announcement.