Citigroup Options Volume Jump as Shares Rally After $20B Buyback, Q4 Earnings
$Citigroup(C)$
As of 3:01 p.m. in New York Wednesday, about 283,400 options changed hands, more than triple the 20-day average volume of 92,689, according to data compiled by Bloomberg. Call options that give the holders the right to buy Citigroup shares at a specified price accounted for more than 75% of the total volume.
Investors are piling into Citigroup shares, sending the price climbing more than 6% and boosting the appeal of call options. The fourth quarter financial results signal what analyst Mike Mayo described as evidence that the bank is "transitioning from value destruction to value creation."
Citigroup reported net interest income (NII) of $13.73 billion for the three months that ended in December. That's higher than the $13.45 billion expected by analysts, according to Bloomberg consensus. Services, wealth and U.S. personal banking revenue all beat the average analyst estimate.
While the company lowered its 2026 outlook for return on tangible common equity (ROTCE) to between 10% and 11% from a previous range of 11% to 12%, shares still rallied after the company announced the share buyback, which equates to about 14% of its market capitalization.
"The 14%, as well as the total expected payout yield, top the big six US banks," Bloomberg Intelligence analysts Alison Williams and Ravi Chelluri wrote in a note Wednesday. "Cost guidance was also better than some fears after 4Q expense were better and provisions were about in line. EPS estimates may be stable, with revenue, NII and expense guidance netting to about in line with consensus."
Call options that give holders the right to buy Citigroup shares at $80 each in two days attracted the heaviest trading, with volume climbing 70% to 20,619 contracts. Each contract covers 100 shares. Demand for the calls increased as the share price advanced to advanced to $78.76, increasing the odds that the contract would be in the money before it expires on Friday.
A close at that level would be the highest for Citigroup shares since May 2021.
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