As Bank of America hovers above its 52-week lows, options traders Friday are apparently anticipating that the stock will fall sharply in the next six months.
- Who Really Owns BofA?
Trading is heavy in the March options as 20,000 March 3 puts and more than 38,000 March 4 calls change hands, with one block of the latter going for $0.32. This action in both strikes in March is less than their respective open interest levels, so the trades could be closing positions.
At the same time, OptionMonster's tracking systems show unusual volume out in August, where two large blocks of the August 2.50 puts traded. Blocks of 20,000 and 15,000 both went for $0.92, higher than the theoretical value and thereby indicating that they were purchased. The stock would need to be at $1.58 by expiration just to break even, and below that to produce a profit.
- OptionMonster School: Protective Puts vs Short Puts
BAC stock is just about flat in Friday midday trading at $3.17, but still above its Feb. 20 low of $2.53. The stock reached its high of $43.45 almost a year ago but was trading over $38 as recently as October.
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CNBC Stock & Option Coverage:
- Options Tips from Jon Najarian
- Read The CNBC Stock Blog
- Options Tips from Pete Najarian
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The Other Financials Today:
Wells Fargo
Citigroup
JPMorgan Chase
General Electric
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Chris McKhann is an analyst and writer for OptionMonster.
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