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What's behind call action in Citigroup

Chris McKhann (chris.mckhann@optionmonster.com)

Citigroup is seeing heavy call activity as the bank comes down from an 18-month high hit this morning.

A trader bought 3,000 February 42 calls for the ask price of $1.74 against open interest of more than 6,000, according to optionMONSTER systems. At the same time, he or she sold 3,000 April 45 calls for $1.55 in volume far above previous open interest of 354, so that is a new position.

This could be a short diagonal spread, which would profit if C rises in the short term but not beyond $45. But it looks more likely that this is a roll, with the trader buying back short calls in February and rolling them to the higher, later-dated strike. (See our Education section)

C is currently trading at $42.23, down 0.5 percent on the day. The stock hit $42.55 this morning, its lowest level since July 2011, but has given up some of that ground. It has been on the rise from support at $25 since late July of last year.

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