Dan Nathan's Citigroup Options Trade

Dan Nathan spoke on CNBC's "Options Action" about a bearish options trade in Citigroup Inc C.

He said the financial stocks were supposed to benefit from deregulation, fiscal stimulus and global recovery, but they are not doing well. Citigroup is struggling since September and it has recently bounced off an important support level of $60. Nathan believes it might drop below $60 in early 2019 and if that happens, he sees it trading in the low $50s.

Nathan expects the stock to drop back to $60 in the near term and he wants to use options to make a bearish trade. He wants to buy the December 64/60 put spread for $1. The trade breaks even at $63 and if the stock drops to $60 until the December expiration, it can make its maximal profit of $3. The December expiration covers the next Fed meeting.