Call Buyers Flock To Bank Of America Stock Ahead Of Earnings

BAC has traded higher after earnings in five of the last eight quarters

by Patrick Martin

Published on Apr 13, 2018 at 12:14 PM
Updated on Jun 24, 2020 at 10:16 AM

Earnings season is underway, and bank name Bank of America Corp (NYSE:BAC) will kick things off next week, as it's scheduled to report first-quarter earnings before the open Monday. BAC stock will try to avoid the fate of sector peers JPMorgan (JPM), Wells Fargo (WFC), and Citigroup (C), which have turned lower today in the wake of their quarterly reports. Let's take a closer look at BAC's earnings history below.

BAC stock has had a positive earnings reaction in five of the last eight quarters. In the last two years overall, the equity has averaged a 1.1% move the day after earnings, regardless of direction. This time around, the options market is pricing in a larger-than-usual 3.7% one-day move, per Trade-Alert.

Looking closer at the charts, Bank of America shares touched a multi-year high of $33.05 a month ago, overtaking their 20-day moving average for the first time in three weeks. Today, however, the stock is down 2.1% to trade at $29.79, breaching this trendline once more.

In the options pits, calls have become more popular in the past two weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 4.57, which ranks in the elevated 83rd percentile of its annual range.

Shifting gears to today, call volume has ramped up. Over 253,000 call options have changed hands, two times the average intraday pace, and volume is pacing for the 99th percentile of its annual range.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!