Sponsored By:

Cigna (CI)

April 16, 2009

ACTION:

Buy the CI May 25 Calls (CIEE) for 75 cents or better


Dear Fellow Options Traders,

Cigna Corp. (CI) sells healthcare, disability and life insurance mostly through the workplace. The company has struggled with a debt downgrade and fewer people to insure in the workplace. But, it appears the company's fortune is starting to look a bit brighter.

Cigna is up 25% year-to-date. On April 13, Fitch Ratings revised the company's debt outlook from negative to stable. CI's earnings are expected to be $3.87 this year and $4.20 in 2010. With the company's balance sheet improving and its income growing, it is currently trading at about a 5 price-to-earnings multiple.

Institutional option investors are accumulating more than 31,000 Cigna calls today. This represents 50% of the total amount of all calls outstanding in Cigna and four times normal volume. More impressively, this is not the only large call buying action in CI. We saw equally impressive call activity in CI on March 18, and April 9 and 10.

We are convinced.

Possible near-term catalysts include the company's earnings report on April 30 and a rumored takeover.

We recommend joining the institutional buyers, purchase the CI May 25 Calls (CIEE) for 75 cents or less.

Have a great day trading.


Nick Atkeson and Andrew Houghton
Editors
Options Trader