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

Option bulls are beginning to take note of Bank of America Corp's recent uptrend

by Karee Venema

Published on Nov 20, 2014 at 10:30 AM
Updated on Apr 20, 2015 at 5:32 PM

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 option bulls are beginning to climb on board.

Most Active Options Table

Option bears have targeted Bank of America Corp in recent months, as evidenced by the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.28, which ranks in the 96th percentile of its annual range. Simply stated, puts have been bought to open over calls at a faster pace just 4% of the time within the past year.

Today, however, it's call players that have set their sights on the banking giant. Specifically, calls are trading at 1.5 times what's typically seen at this point in the day, and are outpacing puts by a 4-to-1 margin. What's more, traders are showing a preference for short-term contracts, per the stock's 30-day at-the-money implied volatility (IV), which is up 3.5% to 16.8%.

Most active by a mile is BAC's November 17 call, where 19,316 contracts have changed hands. The majority of these have gone off on the ask side, and IV has surged 7.2 percentage points, hinting at the possibility new positions are being purchased. Data from the ISE confirms that at least a portion of this morning's activity is of the buy-to-open kind. Profit for today's traders is theoretically unlimited to the upside, while losses are capped at the initial cash outlay, should BAC settle south of the strike at tomorrow's close, when the front-month contracts expire.

On the charts, Bank of America Corp (NYSE:BAC) has been in rally mode since taking a sharp bounce off its 120-day moving average in mid-October, with the shares up 10% to trade at $16.98. Should the equity continue to make headway, a further shift in sentiment among option traders could help propel the shares higher.


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