NewsHK
A path-dependent analysis suggests the market may have underestimated the likelihood that Citigroup stock reaches $140 by mid-October, contradicting standard probability models.
While the Federal Reserve's recent rate hike caused Citigroup shares to drop more than 2% in a midweek session, the stock remains up nearly 14% year-to-date.
The price decline was attributed to accelerated deposit beta, where banks must raise rates on interest-bearing deposits to retain client cash, potentially compressing net interest margin gains faster than loan yields can reprice.
Standard market metrics indicate a low probability for bullish bets on the bank. For a 135/140 bull call spread expiring on Oct. 16, Wall Street defines the probability of breakeven at 37.4%.
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