Every once in a while a “black swan” type of opportunity presents itself. That is to say, an opportunity that is quite reasonable considering the upside.

Of all of the financial stocks that have been impugned in the recent debacle, few took it on the chin as hard as Citi. Once a giant in the financial industry, the company saw its market value and operations decimated during the debacle, losing some 90% of its value literally overnight.

In the past few weeks though, the company has taken steps to free itself from the taxpayer trough by repaying the government $20 billion in TARP funds, rationalizing operations and increasing its capital strength. What Citi does have – that many of its competitors do not – is unmatched global operations.

The story in coming years will be emerging markets and the growth that they still have in store for them. Citi is among the few banks that have the scope to provide the type of necessary services, from banking to investment banking all over the globe. And that franchise is currently being ignored by investors.

If you recall, we made a ton of money on Citi last year when we bought just before the insiders did and took profits when the a shares more than doubled for us. This time, we will go out two years with a cheap LEAP play that could give us ten to 1 profits or a big zero.

Banks in the US are benefiting greatly from the Fed’s zero interest rate policy. It’s a license to print money and they are using the opportunity to get their books in order. When you can borrow from the Fed at next to nothing and then reinvest either in treasuries or as lendable assets, you can make-up a lot of ground quickly.

A look at the major banks that have reported recently is proof of that. JP Morgan just came in with a whopping $3.3 billion in profits, while substantially increasing loan loss reserves. Citi is not as fortunate, still reporting sub-par numbers, but it is playing in the same ballpark. And the Fed is not likely to abandon its easy money policy anytime soon.

So, with this play, we are taking a big speculation that the shares of Citigroup have seen their worst days. And good news going forward could easily propel the shares much higher since this is a “headline” stock.

Here’s the play:

Buy the Citigroup January 2012 $5 LEAP calls (WRV AA) currently trading for $0.48 (48 cents per contract).

Do not pay more than $0.52 per contract.

We are looking for Citi shares to trade to the $7 to $10 range by expiration, and we will likely hold this position for a while. It will be carried in our speculative portfolio.

Karim