Citigroup faces downward pressure due to sector weakness and rising rates; likely to decline before earnings.

Yes, among all the major banks, Citi is certainly one of the weaker names that will announce its results next week, and that is why when we look at the price chart, we find that it has recently fallen below 130.

It has had a chance to test this level as resistance, and so far, the price has been rejected at this level. This leads me to believe that if you look at the relative strength, and look at the direction of the stock before the earnings announcement, I think there is a greater likelihood of seeing this move downwards, especially if you look at the general pressure the financial sector is facing as interest rates continue to rise.

I think weaker banks like Citigroup are vulnerable to a decline, and that's why I'm looking to buy some downside protection or make a tactical short trade right here.

Going into the November expiry date, I'm considering buying the spread of put options between 130 and 115.

Looking earlier today, you could pay around $5.50, giving you a risk-to-reward ratio of slightly less than two to one if Citigroup sees further weakness in earnings next week.