Citigroup Put Open Interest Elevated Before Earnings

Put open interest has surged on Citgroup of late

Managing Editor
Jul 12, 2019 at 11:07 AM
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Bank giant Citigroup Inc (NYSE:C) is up 0.3% at $71.83 this afternoon, eyeing its sixth straight weekly win. Options traders may be gearing up for the company's second-quarter earnings, slated for before the market opens, Monday, July 15. Below we will take a look at how C has been faring on the charts, as well as to what the options market is pricing in for the stock's post-earnings moves.

As alluded to earlier, with the stock eyeing a sixth weekly win, it has been climbing the charts. Capturing a myriad of pullbacks has been the $61-$62 floor of support, with the $72 ceiling containing two breakout attempts so far this year. Overall, Citigroup stock has tacked on 32% year-to-date.

Daily C with Highlight Since Jan 2019

Looking at the financial name's earnings history, the stock has closed flat or higher the day after earnings in five of the past eight quarters -- including a 4% surge in mid-January. Over the past two years, the shares have swung an average of 1.8% the day after earnings, regardless of direction. This time around, the options market is pricing in a larger-than-usual 3.1% swing for Monday's trading. 

Looking at options, near-term options traders are unusually put-skewed on C, according to its Schaeffer's put/call open interest ratio (SOIR) of 1.03. This reading ranks in the 86th annual percentile, showing that it's rare for put open interest to outweigh call open interest among contracts expiring within three months. Currently, peak put open interest lies at the January 2020 60- and 65-strikes, with around 30,000 contracts at each.

Analyst attention has been bullish on Citigroup, with all 14 covering firms sporting a "buy" or "strong buy" recommendation coming into today. This makes the stock's average 12-month price target even less surprising, as it comes in 12.6% above current trading levels.


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