Last-Minute Option Bulls Bombard Sinking Bank of America Corp (BAC)

Bank of America Corp (NYSE:BAC) is spiraling after this morning's dismal jobs report

Jun 3, 2016 at 10:52 AM
facebook twitter linkedin

Financial stocks are getting slaughtered today, after this morning's dismal jobs report has seemingly lessened the chance of a Fed rate hike in June. Bank of America Corp (NYSE:BAC) is no exception, with the bank stock down 4.8% at $14.23. Nevertheless, speculative players are flooding BAC's options pits, with many eyeing a big bounce by tonight's close.

Taking a quick step back, roughly 221,000 call options are on the tape thus far -- five times the average intraday rate, and in the 99th annual percentile. By contrast, around 84,000 BAC put options have changed hands. Still, this is three times the expected intraday amount, and in the 98th annual percentile.

Most active by a mile is BAC's weekly 6/3 14.50-strike call, where 69,785 contracts have changed hands. It looks as thought the majority of the action is of the buy-to-open kind, meaning traders are expecting the stock to reverse course and rally north of the strike by tonight's close -- when the weekly series expires.

Today's call-skewed session just echoes the recent activity seen in BAC's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio has jumped to 5.79 from 1.11 in the past two weeks. What's more, the current ratio ranks higher than 89% of all comparable readings taken in the past year.

This optimism is seen outside of the options pits, as well. Short interest, for example, accounts for less than 1% of BAC's available float. Plus, three-quarters of covering analysts maintain a "buy" or better rating, with not a single "sell" to be found.

What's surprising is that such lofty expectations surround a stock that's been a long-term laggard on the charts. Since hitting a five-year peak of $18.48 last July, shares of Bank of America Corp (NYSE:BAC) have surrendered nearly one-quarter of their value. Additionally, the stock's recent Fed-induced rally was quickly halted in the $15-$15.30 region -- an area that served as support in August and September of last year. Should BAC stock continue to struggle, an unwinding of optimism could spark a fresh wave of selling pressure.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1