Bank of America Stock Boasts Perfect Buying Opportunity

BAC has exceeded option traders' volatility expectations

Dec 21, 2021 at 12:42 PM
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Financial name Bank of America Corp (NYSE:BAC) is finding support at the $43-$44 level, which is home to its early-June highs and coincides with its +50% year-over-year return. There have been macro concerns about a narrowing yield curve in recent weeks, but if the yield curve does reverse course, BAC could find buyers. With this foundation in place, Bank of America stock looks poised to add to its 45% year-to-date gains. 


Short-term options traders have rarely been more put-biased. BAC's Schaeffer's put/call open interest ratio (SOIR) of 1.09 sits in the 94th percentile of its 12-month range. However, call buyers have returned over the past two weeks – a trend that preceded bullish price action in both late-January and mid-April. Short interest has begun to unwind as well, after climbing to an 18-month high.
Furthermore, the security's Schaeffer's Volatility Scorecard (SVS) sits at a high 91 out of 100, meaning BAC has exceeded option traders' volatility expectations during the past year. Our recommended call option has a leverage ratio of 7.6, and will double in value on a 12.5% rise in the underlying equity.
Subscribers to Schaeffer's Weekend Trader options recommendation service received this BAC commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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