Bank Stock Boosted by Double Upgrade

Calls have been popular in the options pits

Deputy Editor
Mar 24, 2021 at 9:13 AM
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The shares of Bank of New York Mellon Corp (NYSE:BK) are up 1.8% in electronic trading this morning, after a double-upgrade from BofA Global Research to "buy" from "underperform." The firm also lifted its price target to $50 from $43, citing long-term growth expectations for earnings and revenue, and noting that the bank is well-positioned for rising interest rates.

After bouncing off the $39 region in late January, BK enjoyed a rally to a March 18 annual high of $47.76. Though the stock has been cooling off since that high, its on track to snap that three-day skid today, while its 30-day moving average has stepped up as support. Longer term, BK is up around 62% year-over-year. 

There is plenty of room for further upgrades amongst the brokerage bunch. Coming into today, five analysts carried a "strong buy" rating on BK, and seven a "hold" or worse.

Sentiment has been much more optimistic in the options pits, however. This is per Bank of New York Mellon stock's 50-day call/put volume ratio of 10.71 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 98% of readings from the past year, revealing long calls being picked up at a much faster-than-usual pace during this time. 

Speculating on BK's next move with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 30% stands higher than just 10% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 


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