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Bullish options on fire in Bank of America

Adam Jeffery | CNBC

Upside option activity in Bank of America was on fire again yesterday.

The October 15 calls really stood out, with most of the large prints purchased for $0.50 to $0.65 as almost 12,000 contracts changed hands, according to OptionMonster's real-time tracking systems. There was also heavy buying in the Weekly 15 calls that expire next Friday, which saw more than 20,000 contracts go for $0.04 to $0.14.

These calls lock in the price where shares can be purchased no matter how far the stock might rise, potentially profiting from a move higher for much less cost than buying shares outright. The leverage can be extreme if traders time the rally correctly, but the contracts can end up worthless if the shares fail to gain enough by their expiration dates.

Bank of America rose 3.14 percent to $14.76 yesterday, closing near the peaks of the session. Boosted by a strong earnings report earlier in the week, the stock is now back to its highest levels since early 2011.

Total option volume in the name reached 885,400 yesterday, four times its daily average, with 711,000 calls versus 174,000 puts. More than 1 million contracts turned over in the previous session.

—By CNBC Contributor Pete Najarian

Additional News: Bank of America Paid Bonuses to Foreclose: Lawsuit

Additional Views: Bulls pile intoBank of America

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Disclosures:

Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com. Najarian owns BAC calls.

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