From its high of around 56 to its low of about 1, Citi is now trading at 4.85. It’s 30 / 90 / 260 day historical volatilities are 77% / 72% / 162% respectively and the stock has more than tripled from its low. Additionally, many blogs have recently noted that no one knows exactly how to calculate the market cap of Citi, as there are many different ways of calculating the number of shares outstanding. These all contribute to the difficulty in evaluating the the actual value of Citi.
Banks have also recently jumped in value significantly, with much liquidity being pumped into the system and the understanding that it will be difficult for a systematically important financial institution to be allowed to fail. Given this, the possibility that Citi stock doubles or triples from here on out (which will still be well under its peak value) is more than miniscule, especially on a slightly longer timeframe. Citi itself is a highly respected institution and has not been decimated like AIG and has not been as forced of a seller of good assets. It brings a very strong retail network along with great exposure to emerging markets, where a lot of growth in the near future seems to be stemming.
Long dated call options on Citi are priced cheaply, and I’m a buyer of the Jan 2011 5.00 call options.
