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Despite boasting a year-over-year gain of more than 46%, short-term option traders remain wary of Bank of America Corp (NYSE:BAC - 11.88). In fact, just today the financial concern has seen roughly 69,000 puts change hands -- a 47% mark-up to its average intraday put volume. Plus, most of the action has transpired at the weekly 2/22 11.50-strike put, suggesting speculators are gambling on a short-term dip for BAC.
More specifically, roughly 22,800 contracts have crossed at the weekly put strike -- 97% at the ask price, suggesting they were bought. Furthermore, this strike is home to just over 18,600 puts outstanding, pointing to an influx of fresh bearish bets. Digging even deeper, a block of 20,000 of the puts traded at the ask price of $0.10. By purchasing the puts to open, the buyer is expecting BAC to retreat beneath the $11.40 level (strike minus premium paid) by the closing bell next Friday, Feb. 22, when the options expire.
As alluded to earlier, BAC is no stranger to skepticism among the options crowd. In fact, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.90 stands just 7 percentage points from a 52-week peak. Or, in simpler terms, near-term options speculators have rarely been more put-heavy during the past year.
In the soon-to-expire February series of options, the 11 strike is home to more than 85,300 puts outstanding. This abundance of bearish bets could translate into a layer of options-related support for BAC this week.
However, options traders aren't the only group skeptical of BAC. Despite outshining the broader S&P 500 Index (SPX) by 14 percentage points during the past three months, BAC boasts just nine "buy" or better analyst endorsements. For comparison, the stock harbors twice as many "hold" or worse recommendations. From a contrarian standpoint, this leaves the door wide open for future upgrades to lure even more buyers to the bandwagon.
At last look, BAC has added 1% to wink at the $11.88 level.