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Citigroup Inc (C) Call Traders Place Bets for the New Year

But a January earnings report could set C back

by 11/22/2013 12:12 PM
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Option Brief: Citigroup Inc (NYSE:C) is attracting plenty of attention from option traders on both sides of the fence this morning. Call volume is running at more than three times its average intraday pace, while put volume is more than doubling its intraday norm.

Most active so far is C's January 2014 55-strike call, where over 23,000 contracts have crossed the tape. The activity here appears to be a mix of buying and selling activity. A sizable block of 11,000 contracts traded at the bid price of $0.71 earlier, suggesting they were sold, while another notable block of 9,023 changed hands at the ask -- indicating they were purchased.

Today's call buyers are looking for Citigroup shares -- currently perched at $52.18 -- to rally above the $55 level by January options expiration. That would require the stock to touch a new multi-year high. If the gains fail to materialize, however, the most the traders will lose is the initial premium paid. Meanwhile, speculators who sold the calls are likely wagering on C to remain pinned beneath this strike during the next couple of months.

Citigroup Inc (NYSE:C) is tentatively scheduled to report fourth-quarter earnings ahead of the aforementioned options' expiration date. Specifically, the quarterly report is predicted to be released sometime between Jan. 13 and 17. Historically, C has beaten the consensus per-share profit outlook in five out of the past eight quarters; however, on average, the shares shed 0.3% a day after the fact.


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