Reports that Citi (C, news, chart, volatility) may be in talks to sell Smith Barney to Morgan Stanley has shares of both firms whipping around. Citi dipped 25cents to 6.70 but has since bounced slightly. Options flow in C is dominated by Put trading, with more than 100,000 Puts vs 58,000 calls on the tape with 20min to go. Feb 8 puts saw buying when share were near $7.05 this morning. MS shares are up 4% near 19.06 and calls outnumber puts there nearly 2 to 1. Jan 20 calls are most active in MS, with 10,200 on the tape and buyers currently paying 75cents.