Traders Up the Ante On Bank of America Corporation (BAC)

Bank of America Corp (NYSE:BAC) speculators are banking on extended gains

by Alex Eppstein

Published on May 19, 2015 at 1:22 PM
Updated on Jun 24, 2020 at 10:16 AM

Bank of America Corp (NYSE:BAC) is up 1.3% this afternoon at $16.72, after the company scored a legal victory last night. This has caught the attention of option bulls, as the financial firm's calls are running at a faster-than-usual intraday clip. By the numbers, 124,000 calls are on the tape, versus 52,000 puts.

The most active BAC strike is the in-the-money June 16 call, where more than 12,700 contracts have been exchanged. A number of these bets may have been bought to open by speculators anticipating extended gains through front-month options expiration, at the close on Friday, June 19. Specifically, based on the volume-weighted average price (VWAP) of $0.76, the buyers think BAC will topple $16.76 (strike plus VWAP) within the option's lifetime.

Today's bullish betting marks a relative change of pace for the security. BAC's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 0.30 -- in the 90th annual percentile. Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) stands at a 12-month high of 0.85, indicating short-term speculators have never been as put-skewed during the previous year.

On the charts, Bank of America Corp (NYSE:BAC) has been trying to battle back from an early January sell-off. Since bottoming at $14.97 in mid-January, the stock has muscled 11.7% higher.

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