Citigroup has been on a steady upward path for nine months, moving within an ascending channel. Recently, the price nearly hit $125, testing the upper limit, but then sellers stepped in and pushed it back down to about $117-118. The focus is now on the yellow dotted midline support between $116 and $117. This midline, along with a dashed trendline, is where traders are keeping a close eye. If Citigroup can hold steady at this level, it might rise again towards the $124 to $128 range, especially as interest rates stabilize into 2025. However, there is concern about a potential break below the $116 support. If that happens, the stock could drop by 8-10%, hitting the lower boundary around $108-112. Such a drop would signal a weakening of the upward trend. Managing risk is important. The $115-116 area is critical for bullish traders. Closing below this level would indicate deeper issues and could challenge the current pullback as part of the uptrend. How Citigroup behaves at this midline will be crucial in determining whether it tries to rally again or faces a larger drop. Looking back at early 2025, the steady ascending channel was important. When the midline support near $116 failed during summer volatility, it indicated a trend shift, leading the stock away from its predictable upward path. Currently, with the stock around $105, the market is processing last week’s mixed Q4 2025 earnings report amidst signs of a cooling economy. Implied volatility is quite high at 35%, well above the 52-week average of 25%, making option premiums relatively costly. This reflects the uncertainty following a weak jobs report that raised doubts about economic strength in 2026. For those who think the dip after earnings is excessive, selling out-of-the-money puts could be a good strategy. A trader might sell February $100 strike puts to take advantage of the high premium from elevated volatility. This allows for income while waiting for a possible price rebound or to buy shares at a lower cost if the stock drops further. On the other hand, those expecting more weakness might consider buying put spreads to limit their risks and costs. For example, buying a March $105/$100 put spread would provide downside protection while keeping upfront expenses down, which is wise given the high option prices. This strategy aligns with the recent rise in the put/call ratio to 1.2, indicating many are preparing for a potential retest of the October 2025 lows. In this uncertain environment, a neutral approach like an iron condor could also work well in the near future. By selling an out-of-the-money call spread above resistance around $110 and a put spread below support near $100, a trader can profit if Citigroup stays within a certain range. This strategy benefits from the declining high implied volatility as long as the stock doesn’t make a large, unexpected move.

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