Goldman Sachs Group Inc, Citigroup Inc. Options Active Amid Financial Rally

Short-term traders are placing bets on rallying Goldman Sachs Group Inc (GS), Citigroup Inc (C)

by Andrea Kramer

Published on Jun 5, 2015 at 11:25 AM
Updated on Jun 24, 2020 at 10:16 AM

Financial stocks are gaining ground this morning, and Goldman Sachs Group Inc (NYSE:GS) and Citigroup Inc (NYSE:C) are no exception. The former has added 1.4% to trade at $211.85 -- and earlier hit a post-recession peak of $211.94 -- and the latter was last seen 2.1% higher at $56.47, within a chip-shot of new-high territory. Against this backdrop, GS and C options are flying off the shelves, as traders place short-term bets. 

Eleventh-hour option bulls are circling GS, wagering on even higher highs for the stock by the close. Call volume is running at four times the average intraday rate, with buy-to-open action spotted at the weekly 6/5 210 and 212.50 strikes -- the two most popular options thus far.

Goldman Sachs Group Inc (NYSE:GS) calls have outnumbered puts by a margin of 3-to-1 today, marking a major shift in sentiment. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.81 stands higher than 99% of all other readings from the past year. In other words, GS speculators have been buying to open puts over calls at a near-annual-high clip during the past two weeks. A capitulation among these skeptics could result in tailwinds.

C options, meanwhile, are running at twice the average intraday pace. The most popular option is the out-of-the-money June 52 put, where it looks like traders are purchasing the contracts to open. By doing so, the speculators are either gambling on C to backpedal south of $52 by the close on Friday, June 19, when front-month options expire, or they're looking to protect their C shares with an options hedge. 

Whatever the motive, Citigroup Inc's (NYSE:C) near-term options are a bargain right now, relatively speaking. The stock's Schaeffer's Volatility Index (SVI) of 19% stands higher than just 24% of all other readings from the past year, suggesting C's short-term contracts are attractively priced, from a historical standpoint.


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