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

Bank of America Corp put player bets on a slow start to the new year

Oct 31, 2014 at 1:50 PM
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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 today is financial firm Bank of America Corp (NYSE:BAC), where January puts are in focus.

Most Active Options Table

Bank of America Corp is following in the bullish footsteps of the broader equities market -- up 0.7% to trade at $17.15. This move higher -- which just echoes the stock's recent technical trajectory -- has prompted a number of speculators to sell to close their weekly 10/31 17-strike calls ahead of tonight's expiration.

Elsewhere in BAC's options pits, the January 2015 15-strike put has received notable attention, due to a large block of 15,000 contracts that changed hands earlier at the ask price of $0.15 apiece, suggesting they were bought. Implied volatility edged higher at the transaction, hinting at the possibility a fresh batch of bearish bets was initiated.

If this does represent buy-to-open activity, the speculator's profit will accrue on a move south of breakeven at $14.85 (strike less the premium paid). Losses, meanwhile, are limited to the initial cash outlay, should BAC maintain its perch atop the strike through January options expiration. For today's trader, specifically, this equates to $225,000 (number of contracts * 100 shares per contract * premium paid).

As indicated, though, Bank of America Corp (NYSE:BAC) has been on quite a roll of late. In fact, since taking a sharp bounce off its 120-day moving average in the session subsequent to reporting earnings, BAC has rallied more than 11%. What's more, the shares haven't traded south of $15 on an intraday basis since Aug. 8. Against this backdrop, delta on the aforementioned January put is currently docked at negative 0.13, indicating a slim 13% chance the option will be in the money at expiration.


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