Bank of America Corporation (BAC) Bears Active Ahead of Stress Tests

Bank of America Corp's (BAC) March 14.50 put is being bought to open today

by Karee Venema

Published on Mar 5, 2015 at 10:49 AM
Updated on Apr 20, 2015 at 5:32 PM

The Federal Reserve will release the first phase of its annual stress test results after tonight's close, and ahead of the event, shares of financial giant Bank of America Corp (NYSE:BAC) are up 0.7% at $15.94. In the stock's options pits, puts are trading at 1.2 times what's typically seen at this point in the day, with a number of speculators betting on BAC to drop sharply over the next two weeks.

Specifically, BAC's March 14.50 put has seen the most action thus far, with 12,924 contracts on the tape -- roughly 46% of the equity's total intraday put volume. All signs suggest the majority of these positions are being bought to open, as traders gamble on BAC to move south of $14.50 by the close on Friday, March 20 -- when front-month options expire.

Today's accelerated put activity marks a drastic change of pace in BAC's options arena. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day call/put volume ratio of 6.19 ranks in the 92nd annual percentile. In other words, calls have been bought to open over puts at a faster clip just 8% of the time within the past year.

Elsewhere on the Street, sentiment is more mixed toward a stock that's shed roughly 11% this year -- and more recently, surrendered long-term support atop its 320-day moving average. Of the 19 analysts covering Bank of America Corp (NYSE:BAC), 10 have issued a "strong buy" suggestion, compared to nine "holds" or worse.

Daily Chart of BAC Since March 2014 With 320-Day Moving Average

A Schaeffer's exclusive

TOP STOCK PICKS 2020

Access your FREE insider report before it's too late!


 
 

Partnercenter


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


IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.
Stocks Eye Notable Weekly Gains on 3-Day Surge
Stocks are eyeing big weekly gains
WW Stock Brushes Off Bull Note
Morgan Stanley upgraded the Weight Watchers parent to "overweight" from "equal weight"
IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.