Citigroup Inc. (C) Option Traders Target Multi-Year-High Territory

Citigroup Inc's (C) April 60 call is in focus today

by Karee Venema

Published on Mar 19, 2015 at 1:53 PM
Updated on Apr 20, 2015 at 5:32 PM

It's a pretty dreary day for shares of Citigroup Inc (NYSE:C), which are off 2.4% at $52.46. Options traders are keeping the faith, though, with calls trading at 1.2 times what's typically seen at this point in the day, and outpacing puts by a 3-to-1 margin. Meanwhile, the equity's 30-day at-the-money implied volatility has popped 6.8% to 23.1%.

Drilling down, the security's April 60 call is hands down the most sought-after option, with more than 10,000 contracts on the tape so far -- roughly one-fifth of C's intraday call volume. It appears new positions are being purchased here as traders gamble on the stock to break through the round-number $60 barrier -- territory not charted since January 2009 -- by the close on Friday, April 17, when the options expire.

From a wider sentiment perspective, it's been puts, and not calls, that option traders have been scooping up with some rapidity in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, C's 50-day put/call volume ratio of 0.54 ranks just 9 percentage points from an annual peak.

On the charts, C has been gaining ground since bottoming at a year-to-date low of $46.60 in mid-January, up 12.6%. In fact, the shares got a big boost last week, after the Federal Reserve gave the firm's capital plan an A+ effort in its latest stress tests. Today, though, traders are reacting to news that Citigroup Inc (NYSE:C) will not appeal a U.S. court ruling that blocks it from processing interest payments on Argentine bonds, if it means the bank can shutter its custody operations in the fiscally strapped nation at a quicker pace.

Daily Chart of C Since January 2015

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