Citi stock action

Citi - 7,7 %, trading at 6.27. Seems option barrier works...

 

CBOE TOP TEN MOST ACTIVE PUTS - Equity Options
Ranking Symbol Expiry Month Strike Price Series Volume Last Sale Price Net Change Total Volume
1 WFC Jan 20.0000 54538 1.3500 1.2500 133269
2 C Mar 5.0000 19000 1.8300 0.5700 240632
3 BYO Jan 7.5000 18030 0.4700 0.4200 202265
4 C Jan 2.5000 14607 0.0800 0.0400 240632
5 C Mar 4.0000 12388 1.1300 0.4400 240632
6 WFC Jan 17.5000 12366 0.3500 0.3000 133269
7 QAA Jan 80.0000 12187 0.6600 0.4600 63082
8 C Feb 4.0000 12123 1.0400 0.4600 240632
9 C Feb 3.0000 11447 0.5600 0.2900 240632
10 VBO Jan 30.0000 10000 6.4000 0.4000 29482

Seems, Citi is a buy now

 

Sean Egan said what?

Gadfly credit analyst Sean Egan made an appearance on ABC’s World News Tonight this evening. He provided the sound for David Muir’s piece on Citigroup’s plan to break itself up.

Among his quotes:

The failure of Citicorp would be absolutely catastrophic for the economy. We wouldn’t be surprised if the federal government stepped in within the next 24 or 48 hours and took control of Citigroup.

Er, what? Does he think the Feds are actually going to seize Citi before the weekend? Predictably, the ABC piece didn’t actually follow up on this particular quote…

Egan’s firm competes with the major credit rating agencies, Moody’s, S&P and Fitch. He has been complaining for years that they couldn’t be trusted, that their ratings were BS because they get paid by the firms they rate. Of course he says that, since he’s their competitor. Nevertheless: good call.

I also like him because he called out Bill Gross for playing chicken with the government on the GMAC bailout.

http://optionarmageddon.ml-implode.com/2009/01/14/sean-egan-said-what/

 

Moody’s noted that the U.S. government’s Eligible Asset Guarantee Program does not include some of Citigroup’s investment banking assets. The program covers $301 billion of assets in which Citigroup has a $29 billion first-loss position. Moody’s initially believed that the program was sufficient to cover all of Citigroup’s problematic investment banking portfolios. These portfolios have been subject to very sizable marks, including in the fourth quarter of 2008. Some of these portfolios will not be covered under the asset guarantee program, leaving Citigroup exposed to any further deterioration. Moody’s noted that a high proportion of those assets, going forward, will not be subject to mark-to-market valuations, which will potentially lead to greater earnings stability. The review will focus on these financial issues in the context of Citigroup’s capital structure, which is highly skewed towards hybrid securities as opposed to tangible common equity.

 

CBOE TOP TEN MOST ACTIVE PUTS - Equity Options
Ranking Symbol Expiry Month Strike Price Series Volume Last Sale Price Net Change Total Volume
1 C Feb 4.0000 26613 1.2800 0.2200 97757
2 C Mar 6.0000 25035 3.1000 0.3500 97757
3 GEW Feb 7.5000 20701 0.1700 0.0400 110547
4 GEW Feb 10.0000 11203 0.4500 0.1300 110547
5 BYO Feb 6.0000 10514 1.1100 0.3300 109706
6 GEW Feb 5.0000 10429 0.0900 0.0300 110547
7 PHM Feb 10.0000 9203 1.0500 0.0500 10337
8 CYQ Apr 17.0000 6735 2.5700 0.4000 51559
9 C Feb 3.0000 6551 0.6000 0.0700 97757
10 BYO Feb 5.0000 5964 0.6700 0.2100 109706

Seems to be a buy today... Hum..."today" means "now"...

 

I think, that´s a good time to get rid off some Citi longs.

 

Citigroup to Use $36.5 Billion of Funds for Lending

Citigroup Inc. plans to use $36.5 billion to lend to consumers and companies and to fund U.S. mortgage loans after receiving $45 billion as part of the government’s bailout of the banking industry last year.

The New York-based bank will use $25.7 billion for mortgages, $2.5 billion for consumer loans, $1 billion for student loans, $5.8 billion for credit card lending and $1.5 billion for corporate loans, according to a report to be issued today by Citigroup. A copy was obtained by Bloomberg News.

 

Citi is becaming effectively a branch of the Treasury and its being run by barney frank

 

I agree with Daal regarding Citi.

The following is becoming increasingly obvious:

(1) Citigroup is insolvent

(2) It is being only open for business thanks to the combination of:

(2a) November 2008 explicit guarantee
(2b) Implicit ongoing government guarantee

(3) If the markets were free of government intervention, C stock would be closer to zero to reflect Citigroup's insolvency

(4) If you short C at current levels, you run the risk of the government giving C further handouts, like they did in November 2008

 

I would sell at 3.50. If this level is broken Citi will go to new lows.