Wall Street megabank Citigroup (C) is up 31% over the past year, far outperforming the overall stock market. One trader sees shares continuing higher over the next 13 months.
That’s based on the September 2025 $67.50 calls. With 401 days until expiration, 10,144 contracts traded compared to a prior open interest of 148, for a 69-fold rise in volume on the trade. The buyer of the calls paid $3.30 to make the bullish bet.
Citigroup shares recently traded for just under $58, meaning shares would need to rise by $9.50, or just over 16%, for the option to move in-the-money. The strike price is also right at the bank’s 52-week high of $67.81.
While shares have had a strong year, the bank is still inexpensive at 11 times forward earnings. And Citigroup shares are rallying on the likelihood of interest rate cuts, which should improve bank earnings.
Over the last year, earnings grew by 10%, but revenues rose by less than 1%, amid a slowdown in lending demand and M&A activity on Wall Street.
Action to take: Shares can likely trend higher over the next year, and Citigroup pays a 3.7% dividend, which can boost returns over time.
For traders, the September 2025 calls have plenty of time to play out. Traders could build a position now, and use any seasonal market weakness over the next few months to add to that position for a year-end rally into 2025.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.