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Most Active Options Update: Bank of America Corp (BAC)

Bank of America Corp continues to be the target of option bulls

by 5/19/2014 2:26 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest among options traders this afternoon is Bank of America Corp (NYSE:BAC). Meanwhile, dropping off the list since last time were Intel Corporation (NASDAQ:INTC) and SunEdison Inc (NYSE:SUNE).


Bank of America Corp option traders have shown a preference for long calls over long puts in recent months, per the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.32. What's more, this top-heavy ratio ranks in the 86th percentile of its annual range, meaning calls have been bought to open over puts at a faster-than-usual clip during the past 10 weeks.

It's a similar backdrop in today's session, where calls are trading at a modest mark-up to the intraday average, and outstripping puts by a more than 4-to-1 margin. A number of call players are targeting a move back above the $15.50 mark -- territory BAC has not seen since late April -- over the coming days.

Specifically, the weekly 5/30 and 5/23 15.50-strike calls have seen notable attention today, and nearly all of the 13,041 and 10,761 contracts respectively traded have done so at the ask price. Plus, volume exceeds current levels of open interest at the longer-dated strike, and implied volatility at the 5/23 weekly option has jumped 8.7 percentage points. In other words, it appears new positions are being purchased.

With BAC lingering near $14.67, it would take a rise of more than 5.7% for the calls to move into the money. The options market isn't too confident either strike will expire in the money, as delta was last seen at 0.032 for the weekly 5/23 15.50-strike call, and 0.067 for the weekly 5/30 15.50-strike call.

BAC has been in a steady downtrend in recent months -- pressured lower by its 20-day moving average, as well as some fundamental woes. In today's session, though, Bank of America Corp (NYSE:BAC) scored a legal victory after a U.S. federal appeals court said the financial firm was not liable for a purported $10 billion fraud lawsuit at American International Group Inc (NYSE:AIG). This decision upheld a similar ruling made last November.


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