Bulls keep turning big profits in $C

Citigroup option activity has been bullish for months, and traders are racking up exponential returns.

On Sept. 20, Investitute’s tracking systems detected the purchase of 16,000 October $74 calls for $0.64 as part of a bullish roll with shares at $71.49. This was clearly a new position, as open interest in the strike was only 201 contracts before the trade occurred. Investitute co-founder Pete Najarian has consistently pounded the table in favor of Citigroup all year, choosing it for his final trades on CNBC’s “Fast Money” show last night and again on the network’s “Halftime Report” today.

Those calls traded up to $2.59 today, above the ask price and more than 4 times their original cost. The stock was up 6.1 percent in the same time period, illustrating the kind of leverage that can be achieved through options. It was the second winning Citigroup call trade posted in as many days on Investitute.

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 rose 2.24 percent to close at $75.72 today after reaching a 52-week high of $75.93 earlier in the afternoon. The banking giant has been rallying along with other financial names in anticipation of higher rates and the potential for tax reform.