Citigroup Options Trading: New Opportunities in December Contracts

Investors in Citigroup Inc (Symbol: C) witnessed the introduction of new options trading today, specifically for contracts expiring on December 19th. With 255 days until expiration, these new contracts provide a chance for sellers of puts or calls to potentially earn higher premiums than those available for contracts with shorter timeframes. Using our YieldBoost formula at Stock Options Channel, we analyzed the new December 19th contracts and identified promising put and call options.

Put Contract Insights

The put option with a strike price of $57.50 is currently priced at a bid of $5.10. If an investor sells that put contract, they commit to buying Citigroup shares at $57.50 but also receive the premium, effectively lowering the cost basis of the shares to $52.40 (excluding broker commissions). For those interested in acquiring shares of C, this option provides a compelling alternative to the current market price of $62.56 per share.

This $57.50 strike price reflects about an 8% discount from the current trading price, indicating that it is out-of-the-money by this margin. Current analysis, including greeks and implied greeks, estimates the probability of the put contract expiring worthless at 64%. Stock Options Channel will monitor these odds over time, providing updates on our contract detail page. If the put option does expire worthless, the premium would yield an 8.87% return on the cash committed, or an annualized rate of 12.69%—this is what we term the YieldBoost.

Chart of Citigroup’s Trading History

Here is a chart illustrating Citigroup Inc’s trailing twelve-month trading history, highlighting the position of the $57.50 strike in green:

Call Contract Opportunities

On the calls side, a contract with a strike price of $75.00 currently has a bid of $2.03. If an investor were to buy C shares at the present price of $62.56 and then sell to open that call contract, they would be agreeing to sell the shares at $75.00. Including the premium earned, this strategy could yield a total return of 23.13% if the stock is called away at expiration (this does not include potential dividends or broker commissions). However, if C shares significantly appreciate, a portion of that upside could be missed, underscoring the importance of reviewing both historical trading data and the underlying business fundamentals.

The following chart depicts Citigroup’s trailing twelve-month trading history, with the $75.00 strike price marked in red:

Notably, the $75.00 strike represents roughly a 20% premium compared to the current stock price, meaning it is similarly out-of-the-money. There is also a chance that the covered call contract could expire worthless, allowing the investor to retain both their shares and the premium collected. Current analytical data indicates a 71% probability of this occurring. We will keep track of these probabilities on our website’s contract detail page. If the covered call expires worthless, the premium would signify a 3.24% increase in returns, or an annualized 4.64%—also classified as YieldBoost.

The implied volatility for the put contract stands at 41%, while the call contract’s implied volatility is 34%. Our analysis of actual trailing twelve-month volatility—factoring in the last 251 trading days, as well as today’s stock price of $62.56—estimates this at 33%. For further options contract ideas, visit StockOptionsChannel.com.

Top YieldBoost Calls of the S&P 500 »

also see:

• Floating Rate Preferreds
• HBT Finl Next earnings Date
• DCOM YTD Return

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.