Its going to be a reverse split. I see no way for them to buy back shares since they didn't do so down at the 3.18 mark a month ago. If they were going to buy back and retire shares, they would've done it then. A reverse split is the only other option. Not good for options traders but good for us longs.
If you have purchased your stock in C based on a value premise, the reverse split does not affect that. The negative effect comes from the fact that people can afford more shares of a $5 dollar stock vs. a $20 stock. I personally hope they don't split either though.
According to their 10K - Citi cannot repurchase any shares until after the gov't has completed their sale of shares (pg 273 of the 2009-10K). So Citi could not buy in the $3s.
This agreement may now have changed with the gov't announcing their plan to sell the shares. We should know for certain on April 19th.
What we can be sure of is that many shorts will not want to be caught holding if Citi announces a buyback. Because of that, I expect Citi to rise into the $4.50-5.00 in the next 2 weeks. If the news on the 19th mentions a buyback, profit...or both, this could easily see $6 this month.