Citigroup traders turn 500% profit

Upside option positions in Citigroup paid exponential gains before expiring today.

On June 2, Investitute’s market scanners found that 3,300 Weekly $62 calls that expired this afternoon were purchased mostly for $0.87 with shares at $60.79. Volume was well above the strike’s open interest of 1,311 contracts, indicating that this was fresh buying.

Those calls traded for $5.25 today, a gain of more than 500 percent. The stock was up 10.6 percent in the same time frame, underscoring how options can outperform their underlying shares.

Long calls lock in the price where the 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 was off 0.18 percent to close at $66.88 today. The bank doubled its quarterly dividend and announced a $15.6 billion stock-buyback program after yesterday’s close, following its successful passage of the Federal Reserve’s “stress test.”