Schaeffer's Trading Floor Blog

Big Bank Earnings Preview: Citigroup Inc (C)

Citigroup Inc will unveil its second-quarter earnings results ahead of Monday's open

by 7/11/2014 1:04 PM
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Banking giant Citigroup Inc (NYSE:C) will report quarterly earnings bright and early Monday morning. Ahead of the event, option players at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been growing increasingly bullish.

Specifically, the stock's 10-day call/put volume ratio on this trio of exchanges has jumped to 3.32 from its June 23 reading of 1.40. What's more, the current ratio ranks in the 82nd percentile of its annual range, meaning calls have been bought to open over puts at an accelerated clip. (As a point of reference, June 23 marked the beginning of the July options cycle.)

Echoing this call-skewed bias is C's Schaeffer's put/call open interest ratio (SOIR), which has dropped to 0.89 from 0.97 since July 23, as call open interest among the front three-months' series of options surged 40%. The most recent ratio ranks lower than 61% of similar readings taken in the past year, meaning short-term speculators are more call-heavy than usual toward Citigroup.

Drilling down on the July series, heavy accumulations of call open interest currently reside at C's overhead 47 and 48 strikes, where a collective 37,283 contracts are housed. With front-month expiration occurring at next Friday's close, these levels could translate into short-term resistance for C, as the hedges related to these bets begin to unwind.

Citigroup's encounters with resistance are nothing new, though. Since late March, the stock has struggled against the $48.50-$50.50 region; and, in early June, the equity was quickly rejected by its 200-day moving average, currently located at $49.25. Since then, shares of the financial firm have shed roughly 5.8% to churn near $46.80.

For Citigroup Inc's (NYSE:C) second quarter, analysts are calling for a per-share profit of $1.06 -- a 28-cent drop from the company's year-ago results. C has fallen short of consensus bottom-line estimates in three of the past eight quarters, and a 13-cent profit miss last January sent the shares 4.4% lower in the subsequent session.

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