Tuesday, July 13, 2010

Citigroup: Breakout!: "Buy Bullish Citigroup Options Before Earnings, JPMorgan Says" (C)

UPDATE II: "I have Dishonored My Ancestors: "JP Morgan, One of the First Big Banks to Report, Is Setting a Bad Precedent" (BAC; C; JPM; WFC)"

UPDATE: "Market slump expected to dent profits at big banks" (BAC; C; JPM; WFC)"
Original post:
At $4.23 up 12 cents Citi has popped above all the commonly used (20, 50, 100, 200 day) moving averages, simple and exponential. The last to fall (if we close above it) was the 200 EMA at $4.20.

Plus we have the MACD, the mac daddy (JPM), a big mac but, hopefully, no Mack the Knife.
Here's Bloomberg:
Investors who expect Citigroup Inc. to exceed analysts’ estimates when it reports quarterly results this week should buy bullish options for a bigger payoff than buying the shares alone, JPMorgan Chase & Co. said.

Equity derivatives strategists Amyn Bharwani and Marko Kolanovic recommended that “investors who feel the third-biggest U.S. bank by assets will beat earnings and that the stock will go higher” purchase July $4 calls.

Citigroup options prices indicate that traders are betting on a one-day gain or loss of about 2 percent, compared with a 13 percent average move after the past six earnings reports, the New York-based strategists wrote...MORE

Two words of warning. First, from yesterday's "Citigroup Inc. Stock Poised For Breakout" (C):
Back in June we posted "Citigroup Trapped by Moving Averages As Option Speculators Pour Money In (C) with the stock at $3.95:
...The company reports earnings on July 16, which is also an options expiration.
Although the prior quarter's $4.4 Bil probably won't be repeated because the $0.15/share had a big chunk of trading gains, expect the company to use similar verbiage:
"Loan losses coming down with growth of top-line revenue speaks to the overall recovery,"...
They reported on April 19, the Monday after op-ex. 
...There is reason to believe that the Treasury has an SEC opinion to the effect they shouldn't sell in the window immediately preceeding earnings, in which case we'd have a mystery/history set-up.
At least that's what happened last quarter....
See also:
Citigroup Inc. On Balance Volume Highest In 44 Days (C) 
"Citi: Bove’s Still Bullish; $8.50 in Three Years" (C)