Unusual Options Activity: Bank of America (BAC)

Shares of financial giant Bank of America (BAC) have been in a downtrend for the past six months. One trader sees the potential for a rebound in the next two years.

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  • That’s based on the June 2024 $32 calls. With 717 days until expiration, 8,055 contracts traded compared to a prior open interest of 154, for a 52-fold rise in volume on the trade. The buyer of the calls paid $5.13 to make the trade.

    Shares recently traded for about $31, so they’d need to rise $1 to move in-the-money before expiration. The stock has a 52-week range of just under $31 to just over $50.

    The bank is down 23 percent, and earnings and revenue are slightly down over the past year. A slowdown in investment banking business has weighed on the company.

    Action to take: Shares trade for less than 10 times forward earnings, and the bank has a profit margin near 34 percent. There’s a strong chance shares trade far higher in the next two years. That makes shares a potential buy now. Investors can get a starting yield of 2.6 percent to start.

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  • For traders, the call options are interesting here, as they have ample time to play out. Traders can potentially take advantage of any market weakness to buy more cheaply in the coming weeks should markets continue to decline.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.