Bank of America Bulls, Bears Play Tug of War in Options Market After Earnings
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.
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.
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.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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