Some time ago, a family member of mine decided to take a tiny portion of his speculation portfolio and trade stock options on Citigroup. This wasn’t his investment capital, he was fully aware it could totally and completely blow up, but thought it would be interesting and great entertainment, plus he figured that he was right. With the rest of his “financial house” in order, so to speak, and conservatively managed, it provided far more enjoyment for him than, say, a cruise or blowing the money in Vegas.
He bought $5,338.68 worth of call options (technically, LEAPs, which stand for long-term equity anticipation securities) that expire in January of 2011 with a $5.00 strike price. This allowed him to control 5,000 shares of Citigroup common stock at a total premium cost of $1.07. To break even, then, Citigroup would have to be at $6.07 by January of 2011. If it went to, say, $10, he would be able to cash out for $25,000, or 500% of the original investment.
Either way, he has a lot of fun tracking it and studying the bank. It’s not quite as aggressive as Warren Buffett’s secret copper futures trading operation (talk about risk – that is jet fuel poured on volcano lava!), but at the very least, he is good enough any more at trading options that he could recover at least some of the capital.
Needless to say, I don’t own any Citigroup options. I tend to be active in shares of U.S. Bancorp and Wells Fargo from time to time (for example, buying a lot of it for the accounts of my brothers and sisters during the crash when it was at $8 to $12 per share compared to $26 today). Like clothing companies or musicians, we all develop certain stocks with which we feel comfortable and understand.
Warning: Unless you have a ton of cash, no debt, a steady stream of household income, and understand the risks, do not EVER trade options under ANY circumstances. You will lose everything. Your family will despise you. Your financial life will be over. Okay, maybe it’s not all that bad, but you could suffer some catastrophic losses because you don’t know what you’re doing. Just say no, like to drugs.
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I'm a private investor who loves architecture, furniture, clothes, history, philosophy, books, cooking, and music as much as I do finance. 
