BAC Breaks Higher as Option Bulls Swarm

The equity just hit a 10-month high

Digital Content Manager

Dec 21, 2020 at 3:29 PM

Below is a list of 20 stocks that have attracted the highest weekly options volume in the last 10 trading days, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, with highlighted names new to the list. One new name is financial concern Bank of America Corp (NYSE:BAC).

The equity is continuing to see an influx of options activity today, as investors turn their attention toward the banking space, sparking a sector-wide surge following Friday's upbeat Federal Reserve second stress test results for the year. A price-target hike from Oppenheimer to $41 from $37 is likely helping the security along too. At last check, BAC was up 4.2% at $29.87, and earlier hit a 10-month high of $29.95.

BAC Dec 21

First, a look at today's options activity shows 289,000 calls and 107,000 puts across the tape so far -- double the intraday average. The weekly 12/24 30-strike call and the January 2021 30-strike call are the most popular. Positions are being opened at the former, suggesting these traders expect even more upside for the underlying security by the time these contracts expire on Christmas Eve.

Circling back to White's data, over the past 10 days, Bank of America stock saw 219,524 calls and 82,373 puts exchanged. The most popular during this time were the monthly December 29 call and the weekly 12/11 29-strike call. A deeper dive shows these bulls have rarely been more active during the past year. This is per BAC's 10-day call/put volume ratio of 4.27 on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all but 1% of readings from the past year.

MAO Dec 21

For those wanting to speculate on Bank of America stock's next move, options could be the way to go. The security's Schaeffer's Volatility Index (SVI) of 32% stands higher than only 12% of readings from the past year. This means options traders have been pricing in low volatility expectations at the moment, making these contracts relatively inexpensive.

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