Option Bulls Target Higher Highs for Citigroup Inc (C)

Citigroup Inc reached a fresh five-year peak this afternoon

by

Published on Dec 4, 2014 at 2:06 PM
Updated on Apr 20, 2015 at 5:32 PM

Citigroup Inc (NYSE:C) touched a multi-year high of $55.43 just moments ago -- and was last seen 0.3% higher at $55.40 -- as shareholders are apparently unfazed by the start of a metals fraud trial. Options traders, meanwhile, are wagering on even higher highs for the financial stock over the next few weeks.

Taking a quick step back, C's call volume is running at 1.3 times the expected intraday rate, and more than triples the number of puts on the tape. Seeing the most action is the December 55.50 call, where 3,628 contracts have changed hands. The majority have done so at the ask price, and volume outstrips open interest, pointing to buy-to-open activity -- a change of pace from the put-buying trend we've observed in recent weeks.

By purchasing the near-the-money calls, the traders anticipate C will topple $55.50 by the close on Friday, Dec. 19, when front-month options expire. To put this in perspective, the shares haven't explored the north side of that strike since January 2009. Right now, delta on the call is 0.48, suggesting the contract has about a 1-in-2 chance of being in the money at expiration.

On the charts, Citigroup Inc (NYSE:C) has advanced a modest 6.3% in 2014. But, since hitting a mid-October low of $48.11, the shares have tacked on an impressive 15.2%, with an assist from C's supportive 20-week trendline.


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