Bank of America Bulls, Bears Play Tug of War in Options Market After Earnings

Luzi Ann Santos joined discussion · Oct 16 00:10

There's a tug of war playing out in the $Bank of America (BAC.US)$ options market as bulls and bears take unusual option trades after third quarter financial results beat analysts' estimates.

Before noon time in New York Tuesday, four bullish and three bearish option trades were posted, data tracked by moomoo showed. The biggest of them involved an active seller collecting a $118,080 premium for writing call options that give the holders the right to buy a total of 295,000 Bank of America shares at $45 by Nov. 15.

Source: moomoo desktop app

(To see Bank of America's options chain, click here. For the US options market page, click here.)

Bears were undeterred by Bank of America's third straight quarterly revenue beat. In the second quarter that ended June 30, the company reported revenue of $25.5 billion, surpassing analyst consensus of $25.3 billion, according to estimates compiled by Bloomberg. The company exceeded Wall Street expectations for trading, investment banking fees and global wealth and investment management.

The results "set a good tone that should be helpful for the stock, Bloomberg quoted Piper Sandler analyst Scott Siefers as saying.

Still, bears could be playing it safe. Among the bearish trades posted was a transaction for 1,020 put options that give the holder the right to sell Bank of America shares at $40 by Dec. 20. That strike price is lower than the current stock price of $42.72.

Source: moomoo mobile app

The stock's 1.8% gain Tuesday took this year's rally to 27%, better than the 22.5% advance for the $S&P 500 Index (.SPX.US)$. After that advance, 10 of the 15 technical indicators tracked by moomoo are now flashing warning signals, with the oscillator signaling that the stock could be overbought, and the trend may be turning bearish.

As of 12:03 p.m. Tuesday, inflows into Bank of America outpaced outflows by $76.9 million. That would add to the fourth straight monthly net inflow into the stock, capital trend data tracked by moomoo showed.

Source: moomoo desktop app

Share your thoughts on Bank of America in the comments section. And if you have a price forecast, please vote below.

Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.

Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more

Translate

Report

250K Views

Comment

Luzi Ann Santos

Moomoo Senior News and Community Manager

Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.

6131Followers

17Following

17KVisitors