He doesn't contradict himself. He is shorting the SKF, not C.

a real investor doesnt think of it that way.
by buying stock options your losses are limited to just the premium.
also you get to exercise control over a greater number of shares, once
you execute your buy option.
imagine if you really sink in your money eg. 10 million usd into
buying citigroup shares, and it crashes by 20% overnight.
compare 20% of 10 million usd loss with just a tiny premium ;)

furthermore, if you get your mega-trend right, the heavy gearing from
stock options will amplify your gains, so its a win win situation.
of course, this gadget is a double edged sword. so be careful when
playing with it =)

Lately C is the only stock in my portfolio that hasn't performed.  I
really gave a lot of thought to going with Jan 2010 calls but I think
we have already hit the bottom when C was $18.  I see the stock over
$27 by the end of the year on news of economic recovery.  Remember
that all of the bank's assets are mark-to-market and have been written
down accordingly.  Everyone is looking at mortgage portfolios as
worthless but they will rebound - it's only a matter of time.  The
housing market doesn't actually need to rebound this year - its only
the perception that it will that's important.

Americans want to believe that the worst is over:

http://www.nytimes.com/2008/05/17/business/17housing.html?em&ex=12110...