Bank of America has been explosive, and the bulls think it still has room to run.
optionMONSTER's Heat Seeker monitoring program detected heavy call volume in the financial giant today, one session after handing our premium subscribers gains of more than 200 percent .
The largest transaction occurred 34 minutes after the opening bell, when 24,500 August 18 calls were sold for $0.41 in volume below previous open interest, while 49,000 August 18.50s were bought for $0.19. This suggests that an existing long position was rolled to the higher strike and doubled in size.
Long calls lock in the price where investors can purchase stock, letting them profit from a rally with limited capital at risk. Their cheap cost can also result in significant leverage on a percentage basis if shares advance. Money can also be moved between strikes as shares climb, as happened today, as noted by optionMONSTER co-founder Pete Najarian on CNBC's " Halftime Report " a few minutes ago. (See our Education section)
BAC is off 0.17 percent to $18.09 in afternoon trading but yesterday hit its highest level in more than five years. Earnings and revenue both beat expectations last quarter, and management has been adding staff in an attempt to grow its business. It's also benefited from better sentiment in the sector and a very low price-to-book ratio.
Today's call roll let the investor recover $73,500 of their capital and kept him or her exposed to further upside. In another big transaction, 11,000 Weekly 18.50 calls expiring on July 31 were bought for $0.07 and $0.08.
Almost 360,000 contracts have traded overall in BAC today, making it the second-busiest stock after Apple. Total volume is twice the average amount, with calls outnumbering puts by more than 5 to 1.
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