Citi Dividend Optional?

Thursday, 3 Jan 2008 | 4:01 PM ET

The options market provides perhaps the best window into the future for the broader stock market and right now it’s painting a bleak picture for Citigroup investors.

Fast Money Final Call
Eyeing the dividend option, with Jon Najarian, OptionMonster.com co-founder and CNBC's Dylan Ratigan

Options futures are predicting that Citi’s dividend could be reduced dramatically, Jon Najarian said on Thursday’s Closing Bell, possibly even down to 25 cents in a bid to preserve capital.

Options have several input variables that determine their price: the time until expiration, interest rates, the striking price and the dividend. If one of those variables changes, the price will change as a result, Najarian said. With Citi, every variable but the dividend is known – so the price is in question so long as people are betting that the dividend will drop.

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