When it comes to earnings, heavy call or put buying immediately before earnings are released show last minute panic buying. In most cases, insiders and people who are privy to info leaks buy massive amounts of call or puts. In this case, there are over 2 million calls for $5 Jan. This tells me that the report is very positive and Citi will be higher on Tuesday and the uptrend continues. I used the same logic with LVS, GOOG, and APPL last quarter and made out well. We'll see what happens, but I think we go higher.
Put/Call option reflects speculations instead of leaking informatin about earning. Based on JPM beat estimates and Pandit's positive comments about I would expect that C will beat estimates by C2-4/share or C10-12/share. C will go up for next 3 day by 5%. in next two years C will reach original market cap ($250 Billion) chich is about $10/share.
Normally that's a good assumption, however these options have consistently had an open interest over 2 million. The Jan options were first offered over 2 years ago as LEAPS. If I had to guess many people bought them back in July-Oct 2009 when Citi ran up to 5 and it looked like it was going to keep rising. Then the government diluted the share price by forcing Citi to offer common shares to repay TARP in Dec 2009. I had some of them back then and the value of the options dropped like 60% in a day, so I'm sure many people hung on to them. So don't read too much into the open interest on these. Although it is a very high open interest and it makes me wonder... maybe a buyback, dividend, or reverse split announcement????
I think the Friday am timing of the Treasury's announcement that it will sell its warrants this quarter is a tell that earnings will meet expectations. If anyone outside C has an idea what earnings will be, it should be the Treasury, and they don't need to know what earnings will actually be, just that they won't disappoint. And I am long C, so I hope I'm correct!