Bank of America Corporation (BAC) Jump Sparks Bullish Betting

Bank of America Corp (BAC) call options are trading at twice the average intraday pace

by Andrea Kramer

Published on Feb 6, 2015 at 1:35 PM
Updated on Apr 20, 2015 at 5:32 PM

Bank of America Corp (NYSE:BAC) has jumped 4.5% to $16.68, as financial stocks gain ground on renewed hopes for a sooner-than-expected Fed rate hike. What's more, option bulls are coming out in droves, with BAC call volume running at twice the typical intraday pace.

Eight of the 10 most active options are calls, with the weekly 2/6 16.50-strike call topping the list. It looks like some traders are placing eleventh-hour bets on rallying BAC, expecting the stock to extend its journey north of $16.50 through today's close, when the options expire. Longer-term bulls are picking up the March 17 calls, hoping BAC powers atop $17 by the close on Friday, March 20, when the back-month options cease trading.

Today's bullish bias marks a change of pace for BAC options traders. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.30 stands higher than 86% of all other readings from the past year. In other words, option buyers have favored puts over calls by a wider-than-usual margin during the past two weeks.

On the charts, Bank of America Corp (NYSE:BAC) has been trending lower since hitting a multi-year high of $18.21 on Dec. 31. However, thanks to today's surge, the stock is on pace to end atop its 200-day moving average for the first time since Jan. 13. This trendline acted as a foothold for BAC during the latter half of 2014, but switched roles to serve as a post-earnings roadblock in mid-January.

Daily Chart of BAC since August 2014 with 200-Day Moving Average

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Analyst Goes Bearish on Anthem Stock
Jefferies downgraded Anthem stock to "hold" from "buy," and cut its price target to $257
UNH Stock Pops on Accelerated Payment Promise
Analysts are very bullish on UnitedHealth stock
The Top Lithium Play of 2020
Click to continue to advertiser's site.