Option Bulls Blitz Bank of America Corp (BAC) Amid Uptrend

Bank of America Corp's December 17.50 call is being bought to open today

by Karee Venema

Published on Dec 3, 2014 at 1:22 PM
Updated on Apr 20, 2015 at 5:32 PM

Since hitting its most recent low of $15.43 in mid-October, Bank of America Corp (NYSE:BAC) has bounced more than 11%. The equity is continuing this momentum today -- up roughly 0.6% to trade at $17.20. Nevertheless, option traders are calling for more upside, betting on the shares to rally to a multi-month peak over the next several weeks.

Taking a quick step back, calls are trading at two times the intraday average -- continuing a recent trend -- and are outpacing puts by a nearly 3-to-1 margin. Meanwhile, the stock's 30-day at-the-money implied volatility (IV) has edged 2.1% higher to 16.4%, signaling elevated demand for short-term contracts.

Specifically, BAC's December 17.50 call has seen the most action, with 27,324 contracts on the tape at last check. The majority of these have traded on the ask side, IV is up, and volume easily outstrips open interest, collectively pointing to buy-to-open activity.

By initiating these long calls, traders expect Bank of America Corp (NYSE:BAC) to topple the $17.50 mark by the close on Friday, Dec. 19 -- when front-month options expire -- a level that hasn't been toppled on an intraday basis since March 25. Amid today's pop, the options market is showing increased confidence of an in-the-money finish at expiration, per the call's delta, which has risen to 0.33 from 0.27 at last night's close.


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