Citigroup stock looks like a great option for call traders
Subscribers to Schaeffer's Weekend Trader options recommendation service received this C commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
Shares of Citigroup (C) are firming at key technical levels, including their post-election bear gap, July highs, and 200-day moving average -- a strong foundation for a potential rebound. This setup makes now an opportune time to speculate on C with calls.
According to Schaeffer's Senior Quantitative Analyst Rocky White, Citigroup stock’s move toward its 200-day trendline after spending 80% of the past two months and eight of the last 10 trading days above it has historically led to bullish returns. This pattern has occurred twice in the past three years, and in both instances, the stock was higher one month later, averaging a 7.9% gain.
Further strengthening the bullish case, C’s recent lows found support at its 2024 weekly closing price breakout level. Additionally, the stock remains in an uptrend, boasting a nearly 20% year-over-year gain.
Options positioning also favors a move higher. The stock recently found support at the second-highest open interest (OI) put level, suggesting downside protection and a potential push higher in the coming weeks. If momentum builds, the $75 and $80 call strikes could act as upside magnets.
Furthermore, C’s 50-day put/call ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 81st percentile, indicating elevated pessimism that could unwind, further fueling upside potential.
Our recommended May 67.50 call has a leverage ratio of 8.7, and will double on an 11.5% pop in the underlying security.