Bulls Blitz Bank of America Corp (BAC) Amid New High

Bank of America Corp hit a fresh four-year high in intraday action

by Karee Venema

Published on Dec 24, 2014 at 11:19 AM
Updated on Apr 20, 2015 at 5:09 PM

Bank of America Corp's (NYSE:BAC) options pits are buzzing with bullish activity today. Stoking the flames is a fresh four-year high of $18.09, tagged not long ago. In fact, calls are trading at 1.4 times what's typically seen at this point in the day, and are outpacing puts by a more than 4-to-1 margin.

Most active are the stock's weekly 12/26 and January 2015 18-strike calls, which are apparently being bought to open. By initiating the long calls, speculators are betting on BAC to rally to higher highs by the respective expiration dates.

Widening the sentiment scope reveals today's accelerated call activity runs counter to the withstanding trend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.27 ranks in the 86th percentile of its annual range. In other words, puts have been bought to open over calls at a faster-than-usual clip of late.

Echoing this is BAC's Schaeffer's put/call open interest ratio (SOIR) of 0.83, which rests just 5 percentage points from a 52-week peak. Simply stated, short-term speculators have rarely been as put-skewed toward the stock as they are now.

Considering Bank of America Corp (NYSE:BAC) has rallied nearly 22% from its early August low of $14.84 to trade at $18.08, a portion of this put buying may be at the hands of shareholders hedging against any unexpected downside. Regardless, a continued shift in sentiment among option traders could translate into a fresh burst of buying power for BAC.

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