$C call buyers withdraw big gains

Citigroup has rallied sharply in recent weeks, handing huge profits to bullish option traders.

On Aug. 29, Investitute’s tracking systems identified the purchase of 3,500 October $65 calls for $3.35 and $3.40 with shares at $66.91. This was clearly fresh buying, as volume was well above the strike’s open interest of 1,499 contracts.

Today those calls sold for $9.80, triple their original price. The stock rose 11.7 percent in the same time period, illustrating the kind of leverage tha can be achieved through options. Investitute co-founder Pete Najarian has repeatedly cited bullish option activity in Citigroup for months, and this afternoon he chose the bank again for his final trade on CNBC’s “Halftime Report.”

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

C hit a new 52-week high of $74.74 this morning before ending the session off 0.09 percent at $74.06. The banking giant has surged along with other financials on hopes for tax reform and higher interest rates.