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Option Bulls Won't Quit Bank of America

Bank of America attracted upside option activity for the second session in a row yesterday as its shares staged a surprise rally.

More than 1.1 million contracts traded in the name yesterday, more than five times its daily average. In fact, at least one in every 20 trades in the entire option market was in Bank of America, according to OptionMonster's tracking systems.

A huge block of April 7 calls bought on Wednesday for $0.21 was worth twice as much just a day later. Yesterday traders were even more aggressive as they shifted to the March 8 calls, with about 15,000 contracts going for for $0.07 to $0.11.

Calls fix the price investors must pay to buy a stock. That gives them big leverage if it rallies, but they can also lose everything if it fails to move.

Bank of America closed at $6.31, up 8.61 percent on the day and 13 percent since 2012 began. The next big event for the stock could be on Jan. 19, when earnings come out before the bell.

—Najarian owns BAC calls.

Additional News: Financials Turn Positive, Bank of America Back Above $6

Additional Views: No Substance Behind Bank Stock Surge?

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Options Trading School:

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

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