BAC Surging Thanks to Bull Note, Election Buzz

The equity has gained over 38% in the last six months

Digital Content Manager
Jan 6, 2021 at 10:46 AM
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The shares of Bank of America Corp (NYSE:BAC) are up 6.3% at $32.15 at last check, after the security earned a price-target hike from Deutsche Bank to $35 from $30. Major U.S. banks are also getting a boost from higher Treasury yields this morning, which have risen in response to Georgia's Senate runoff election, with investors hedging against the risk of fiscal spending and borrowing should Democrats win the majority. 

On the charts, the security has been trekking higher after dropping to a March 23, five-year low of $17.95. Since then, shares have added nearly 80%, with support from the 40-day moving average. Today's pop has also helped Bank of America stock break through overhead pressure at the $30.50 mark, which had been keeping a tight lid on further gains over the past couple of weeks. In the last six months, BAC has added 38.5%. 

Analysts were already optimistic toward the security coming into today, with eight of the 14 in question sporting a "strong buy" rating, while six were carrying a tepid "hold" or worse. Meanwhile, the 12-month consensus price target of $31.92 is right in line with current levels.

The options pits have been overwhelmingly bullish. This is per the security's 50-day call/put volume ratio of 2.86 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year. This means calls are being picked up at a faster-than-usual clip.

Drilling down to today's options activity, 180,000 calls have crossed the tape so far, which is four times the average intraday amount. Most popular is the January 2021 21-strike call, followed by the 30-strike call in the same monthly series. 

Now could be a good opportunity to take advantage of BAC's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 34% sits in the low 14th percentile of its annual range, indicating the equity sports attractively priced premiums at the moment. 

 

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