Bank of America Corporation (BAC) and the $2 Million Bullish Bet

Bank of America Corp (NYSE:BAC) is higher today amid a sector-wide rally, and call volume has picked up

by Karee Venema

Published on Jun 5, 2015 at 2:41 PM
Updated on Jun 24, 2020 at 10:16 AM

Bank of America Corp (NYSE:BAC) is following its sector peers higher today, amid increased expectations for a June rate hike. At last check, the stock was up 2.5% at $17.20, and calls were flying off the shelves at a rate four times the intraday average -- and outpacing puts by a more than 5-to-1 margin.

Most active is BAC's November 18 call, where 123,744 contracts are on the tape -- making it the most active overall stock option traded thus far. According to Trade-Alert, one massive block of 35,000 contracts was bought to open for $2.1 million (number of contracts * $0.61 premium paid * 100 shares per contract). By purchasing new positions here, this speculator is hoping BAC topples breakeven at $18.61 (strike plus premium paid) by the time the options expire on Friday, Nov. 20. The stock has not seen the north side of this mark since April 2010.

Today's accelerated call activity marks a change of pace in BAC's options pits -- as evidenced by yesterday's intraday action. In fact, at 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 0.31 ranks in the 89th annual percentile. Simply stated, puts have been bought to open over calls at a near-annual-high clip in recent weeks.

Technically speaking, Bank of America Corp (NYSE:BAC) has been on the mend since hitting its most recent low of $15.25 on April 1, up 12.8%. However, the equity has not closed a session north of $18 since Dec. 30. Regardless of where BAC settles at November options expiration, though, the most today's call buyer stands to lose is the initial premium paid.

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