Bank of America Corporation (BAC) Jump Sparks Bullish Betting

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

Feb 6, 2015 at 1:35 PM
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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

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