Up, down or sideways, shares of Citigroup Inc. are the flavor of the month on Wall Street.

Trading in Citigroup shares has skyrocketed since the beginning of August as market participants look for intraday hedging opportunities among a small group of beaten-down financial services stocks.

Volume in its shares has been particularly strong in the past two weeks when Citi has regularly accounted for nearly one-fifth of NYSE Composite volume.

Part of the increased volume has to do with bets that Citigroup can come out of the credit crisis without further damage. A bigger driver, though, is that Citi's recent higher share price — the stock gained 54% in August and has quadrupled since March — has made it easier to short.

In the wake of a 40% pickup in U.S. stocks since early March, traders are playing for what they expect is an inevitable pullback, according to the heads of several Wall Street trading desks.

In that scenario, especially when buying shares in a shaky financial company, it is important to mitigate risk by finding something else to short.

If, for instance, a trader is going to hold an intraday position in Fannie Mae and Freddie Mac in a bet they are worth more than their current market value, he limits his downside by shorting Citi.

"This is a mechanical trade, not a fundamental one," said Kevin Kruszenski, director of equity trading for KeyCorp's KeyBanc Capital Markets.

Hedge funds, some day traders and several other market participants are using this barbell approach to stay neutral on the banking sector with a little bias intraday toward a specific stock.

Bank of America Corp. is seeing a similar, albeit much smaller, volume increase.

It may be easy to short, but since it is at about $16 a share, speculative buyers see more upside with Citi, which is around $4.50.

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