Bet on This Bank Stock to Make Moves Higher

There's options-related support at BAC's latest pullback point, too

Apr 26, 2024 at 1:07 PM
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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.

Financial giant Bank of America Corp (NYSE:BAC) stock suffered a sharp pullback to the 80-day moving average, but has quickly recaptured the 20- and 50-day trendlines. The equity also bottomed right at the 20-week exponential moving average and broke above the +10% year-to-date and +20% year-over-year levels on a rebound.
 
The stock's pullback also bounced at the February 2022 peak anchored volume weight average price (AVWAP), which was in confluence with January 2024 highs. Recent lows happened right at the front three-month peak put 35 strike, and price action is exhibiting strength despite a broad market selloff.
 
 
At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BAC's 50-day put/call volume ratio sits higher than 92% of readings from the past 12 months. This means traders have been much more bearish than usual in the last two weeks.
 
Options traders looking to bet big are in luck, as Bank of America stock premium is reasonably priced at the moment. This is per its Schaeffer's Volatility Index (SVI) of 23%, which sits in the 18th percentile of its annual range. Plus, its Schaeffer's Volatility Scorecard (SVS) stands at a high 77 out of 100, indicating the stock's exceeded option traders' volatility expectations in the past 12 months.

There is ample opportunity for upgrades, too, per the 14 of 24 covering brokerage firms that maintain a tepid "hold" or worse rating. Our recommended August call has a leverage ratio of 7.96, and will double on a 12.96% rise in the underlying shares.
 

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