Options Traders Target Bank Stock Amid Sector Volatilty

It's no secret that financials have turned volatile as geopolitical tensions ramp up

Lillian Currens

Digital Content Manager

Mar 14, 2022 at 11:48 AM

Bank of America Corp (NYSE:BAC) has followed the rest of the financial sector higher on Monday. The bank stock was last seen up 3.9% at $41.89, as the U.S. Treasury yield bounces back and the broader market eyes a rebound. The overall picture for both BAC and its sector, however, has been a lot more volatile. Between a pending Federal Reserve policy meeting, the Ukraine-Russia conflict, and skyrocketing inflation, it's fair to say that financials have been rattled. In fact, BAC fell all the way from a 13-year high of $50.11 on Feb. 10 to its lowest level since early August in a little less than a month.

Despite this, options traders have been targeting the security in droves. In fact, Bank of America stock just showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of names that have attracted the most weekly options volume in the last two weeks. In this time frame, 2.1 million BAC calls and 1.2 million puts were exchanged. The April 47 call was the most popular during this time period, followed by the weekly 3/11 41-strike call.

mao march 14

Its clear these traders were betting on a bounce for BAC, and it looks like the stock is in the process of staging one. After a brief dip below it, the bank concern reclaimed support at its 320-day moving average late last week. Plus, the stock is still clinging to a 10.4% year-over-year lead. It's also worth noting that the stock is sitting just on the cusp of "oversold" territory, with a 14-day Relative Strength Index (RSI) of 30.

bac march 14

Circling back, these options players have been unusually bullish of late. Per BAC's 10-day call/put volume ratio of 2.95 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 84% of readings from the past year.

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.74 sits in the 12th percentile of its 12-month range. In other words, short-term options traders have rarely been more call-biased.

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