Put Options on FCN on 8/6/2012

When someone has been cooking the books, FTI Consulting has a recipe for recovery but right now they need a recipe for their own recovery. Established in 1982, the company is one of the leading providers of consulting services related to corporate finance and restructuring .It also offers forensic accounting, litigation support, and investigative services to companies confronted with problems such as fraud in order to assist them in their legal defense or pursuit of recoveries. Other consulting service areas include economics, strategic and financial communications, and technology. FTI's main clients are large business enterprises and major law firms.

Stockwinners is Bearish on this FTI for the following reason:

1. Despite several years of steady increases in revenue and profits, FTI Consulting saw its net income plunge roughly 50% from $143 million to $72 million during 2009 to 2010. It attributes the drop to more than $52 million in expenses it paid as it realigned its operational infrastructure to adjust to expected demand for its services. Throughout 2010 it reduced its workforce, acquired additional trade names, and consolidated four office locations. The Strategy has not proven successful and FTI keeps on losing market shares to competitors such as CRA International and Navigant Consulting.
2. Global Economy slow-down has reduced the demand for FTI services.

TRADE: Buy 1 AUG 25 put For Less than $ 2.00

Breakeven and Profit:

• Breakeven at $23 on AUG expiration
• Profit below $23 , make up to $23, Max gain of $23 once FTI reaches $0
• Losses btwn$23 to $25 up to $2 , max loss of $2 above $25

Here is the payoff table:

Trade Buy 1 January $50.00 Call at $2.00 For a net debit of $2.00 Profit/Loss Analysis Breakeven at $52.00 Maximum profit is unbounded Maximum loss is ($200.00) at strike of $50.00 Closing Summary Sold 1 January $50.00 Call at $0.00

Position closed on 8/17/2012 at price of $0.00 with a -100.00% loss in 10 days.

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