Unusual Options Activity: Citigroup (C)

Executive meeting

Wall Street megabank Citigroup (C) is down 8 percent over the past year, as higher interest rates and a slowdown in financial activity have hit the bottom line. One trader sees shares trending lower.

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  • That’s based on the January 2024 $55 puts. With 57 days until expiration, 7,140 contracts traded compared to a prior open interest of 172, for a 42-fold rise in volume on the trade. The buyer pf the puts paid $9.85 to make the bullish bet.

    Citigroup shares recently traded at about $45, making these options about $10 in-the-money, and having no time premium to them at their current pricing. Citigroup has a 52-week low just over $38, so there could be more downside ahead.

    Operationally, the bank has struggled, as indicated by its latest round of layoffs. Earnings grew just 2 percent over the last 12 months, and revenue was up 6 percent.

    Action to take: Long-term investors may want to use a further pullback to the low $40 range to buy shares. Citigroup currently pays a 4.6 percent dividend, and even with a dour outlook, shares trade at about half their book value.

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  • For traders, the January $55 puts can likely deliver double-digit gains, but won’t be a big percentage winner given how far in-the-money they are. Traders may want to look to take a quick profit from any drop lower.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.