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Although Bank of America Corp (NYSE:BAC) has followed the broader equities markets into the red today, calls are trading at a slightly accelerated pace this afternoon. Additionally, calls continue to be the options of choice, and are outpacing their put counterparts by a nearly 3-to-1 ratio.
Receiving notable attention is BAC's January 2015 20-strike call, where 11,970 contracts have changed hands. The majority of these crossed on the ask side and implied volatility has edged higher, hinting at the purchase of new positions. Additionally, data from the International Securities Exchange (ISE) confirms that a portion of the day's activity is of the buy-to-open kind. Considering BAC hasn't traded north of $20 since November 2008, delta on the call is docked at a slim 0.098, indicating a less than 1-in-10 probability the option will expire in the money at the close on Friday, Jan. 16, 2015.
Meanwhile, shorter-term bulls are targeting BAC's weekly 7/11 16-strike call -- which has seen the most action thus far -- as they bet on a quick rebound for the financial firm. With Bank of America Corp (NYSE:BAC) last seen at $15.88, these calls are near the money. However, in order for the call buyers to profit, the stock must be sitting north of breakeven at $16.11 (strike plus the volume-weighted average price of $0.11) at Friday's close, when the weekly contracts expire. Gains will accumulate with each step north of here, while losses are limited to the initial cash outlay, should BAC finish the week south of the strike price.