Unusual Options Activity: Bank of America (BAC)

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  • An outsized rally in financial stocks has helped keep the overall market from dropping too much as tech stocks have sold off. Traders still see some upside in the space.

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  • That’s based on the April 30th $42.50 calls on Bank of America (BAC). With 32 days until expiration, and with shares near $39, the bet has been made that shares will keep moving at least another 3 percent higher.

    Nearly 4,200 contracts traded against a prior open interest of 107, for a 39-fold rise in volume. The trader paid about $0.45 to make the trade.

    Bank of America saw shares take a steep dive last year, and only in recent months have shares pushed past their pre-pandemic levels. While low interest rates may impact banks, a strong steep yield curve points to reasonable profits for bank stocks for some time.

    Action to take: Shares look likely to trend higher. At current prices, however, the stock yields just over 1.8 percent, a bit on the low side. A better way to play this trend is with a call option trade.

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  • The April calls are aggressive, but given the share price in the past few weeks and the low price, they look capable of delivering triple-digit profits. Traders playing a longer uptrend in shares may want to target a later strike date, possibly as far out as August.