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Halftime Report: One Stock Dominating The Trader Radar

One stock is dominating our traders’ radar on Wednesday as it dances around a key level with very heavy volume in the name.

We're talking about Citigroup . With shares up about 15% over the past 5 session, how should you trade?

Instant Insights with the Fast Money Traders

Big volume in the March 4 and June 4 calls suggest option investors expect more upside, explains JJ Kinahan of TD Ameritrade.

But I'm not so sure the action is an endorsement of Citi's fundamentals. Personally, I think Citi is going up because most of its peers went up and it didn’t, adds Zach Karabell of Rivertwice. In other words it’s a laggard going to the mean. But with that said, I'd ride Citi above $4.

If you’re long Citi, you should know it’s a very long term play, adds Joe Terranova. In the space I think the better play is JPMorgan .

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BIG INVESTORS GETTING DEFENSIVE?

Taking a broader look at the bank sector, The S&P Financial Index is poised for a 9-day winning streak, explains host Melissa Lee. That’s only happened twice in the last two decades. But if the latest options action is any indication, that might not be as bullish as it seems.

What’s the trade?

I’m watching the options action in the XLF , says JJ Kinahan. Big Investors are buying June 14 puts. That’s defensive posturing.

With so much short interest in this sector I’d be cautious of long positions in financials, counsels Jared Levy of Peak6 – at least in the short term.

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FAST FLASH: APPLE

The traders are closely watching the action in Apple , after the stock’s run lifted value of the company past $200 billion for the first time.

Only four other U.S. companies -- Exxon Mobil, Microsoft , Walmart and Berkshire Hathaway -- have market values exceeding $200 billion.

What’s the trade?

Apple is a great content creator, says JoeTerranova. I love this stock and plan to stay with it. The only caveat, if the broad market corrects I’d reduce my position.

I’d be a buyer of Apple on any pullback, says Zach Karabell. For example, when the iPad is released the stock could dip. That would be a buying opportunity.

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TOPPING THE TAPE: OIL

The traders are closely watching oil prices after the latest data showed inventories dropped last week.

"Today's ... data certainly has a bullish undertone with both gasoline and distillates off much more than expected," says Chris Jarvis, senior analyst at Caprock Risk Management.

Distillate stocks, which include heating oil and diesel, fell by 2.2 million barrels, far more than the 900,000 barrel draw predicted by the market.

What’s the oil trade?

I’d go long the XLE against something else – perhaps the XLY , counsels JoeTerranova. But if you do put on this trade, understand there’s a lot of volatility in the energy space.

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TAKE YOUR POSITION: 10-YEAR NOTE AUCTION

U.S. government debt prices fell on Wednesday before a 10-year note auction, the second of three this week that will inject a total of $74 billion of new supply into the market.

Prices retreated after a rally Tuesday that held through a strongly bid auction of $40 billion in new three-year notes. But traders appeared to be pricing in a discount before Wednesday's $21 billion sale of reopened 10-year notes.

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CALL THE CLOSE

Jared Levy: I’d protect into the end of the week.

Zachary Karabell: I’d ride Citi above $4

JJ Kinahan: I’m a buyer of the broad market.


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Trader disclosure: On March 10th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Is Long Oil Futures; Terranova Owns (XLE); Terranova Is Short (XLY); Terranova Owns (GLD) March Puts; Terranova Owns (GOOG), (AAPL), (DELL), (EMC), (MSFT); Terranova Owns (CAL) April Puts; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (BAC) Call Spread; Najarian Owns (C) Calls; Najarian Owns (INTC) Calls; Najarian Owns (YHOO) Calls; Kelly Owns (AMZN) Calls; Cortes Is Short Treasuries; Cortes Is Long Oil; Karabell Owns (AAPL), (C), (CSCO), (JPM), (GOOG); Kinahan Owns (C); Kinahan Holds A Long Position In (WFC)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (GOK)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Brian Kelly
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Owns (C)
Kanundrum Capital Owns (JPM)
Kanundrum Capital Owns (SDS)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (GDXJ)
Kanundrum Capital Is Short British Pound
Kanundrum Capital Is Short Treasuries

For Jared Levy
Peak6 Investments Owns And Has An Options Position In (AAPL)
Peak6 Investments Owns And Has An Options Position In (BAC)
Peak6 Investments Owns And Has An Options Position In (BRK.B)
Peak6 Investments Owns And Has An Options Position In (C)
Peak6 Investments Owns And Has An Options Position In (COP)
Peak6 Investments Owns And Has An Options Position In (CSCO)
Peak6 Investments Is Short And Has An Options Position In (CVX)
Peak6 Investments Owns And Has An Options Position In (GLD)
Peak6 Investments Owns And Has An Options Position In (GS)
Peak6 Investments Is Short And Has An Options Position In (GOOG)
Peak6 Investments Owns And Has An Options Position In (INTC)
Peak6 Investments Is Short And Has An Options Position In (JPM)
Peak6 Investments Is Short And Has An Options Position In (MS)
Peak6 Investments Owns And Has An Options Position In (MSFT)
Peak6 Investments Owns And Has An Options Position In (STX)
Peak6 Investments Owns And Has An Options Position In (TXN)
Peak6 Investments Owns And Has An Options Position In (USO)
Peak6 Investments Is Short And Has An Options Position In (VALE)
Peak6 Investments Is Short And Has An Options Position In (WDC)
Peak6 Investments Owns And Has An Options Position In (WFC)
Peak6 Investments Is Short And Has An Options Position In (WMT)
Peak6 Investments Is Short And Has An Options Position In (XLF)
Peak6 Investments Is Short And Has An Options Position In (XOM)
Peak6 Investments Owns And Has An Options Position In (YHOO)
Peak6 Investments Is Short And Has An Options Position In (QQQQ)

For Mike Khouw
Cantor Fitzgerald & Co. Is A Market Maker In (C)

For Anthony Scaramucci
Scaramucci's Fund Has A Long Position In Gold

For Brad Hintz
Hintz Owns Morgan Stanley And Discover
Hintz Owns (CME)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investment Discretion Own More Than 1% Of Barclays PLC, Credit Suisse Group, (C), (GS), (JPM), (MS), (BAC)
Barclays PLC, (C), Credit Suisse Group, (GS), (JPM), (MS), (BAC) UBS AG Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services), Bernstein Received Compensation
An Affiliate Of Bernstein Received Compensation From Barclays PLC, (C), Credit Suisse Group, (JPM), (GS), (MS), UBS AG (Non-Investment Banking-Securities-Related Services)
Bernstein Or Affiliate Received Investment Banking Compensation From (C) In Past 12 Months
Bernstein Or Affiliate Expects To Receive/Seek Investment Banking Compensation From Barclays PLC, (C), Credit Suisse Group, (GS), (JPM), (MS), (BAC) UBS AG In Next 3 Months

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