Bank of America (NYSE:BAC) has seen mixed reports of late, including rumors of a WikiLeaks exposure. The shares have gained more than 5.5% from Wednesday’s close but are still off more than 15% year to date. Has the stock truly begun to recover or will this be a mere hiccup as part of a longer-term downtrend? And if stock traders want to explore strategic alternatives using options, what can they consider?
For BAC bulls and bears, we have outlined two option strategies below. These write-ups are educational in nature and should not be regarded as buy or sell recommendations. All prices are as of Tuesday morning, when BAC shares were trading at $12.62, up eight cents on the day. (more…)
The financial sector has been solidly in recovery mode this year, rising more than 10% collectively compared to the 7% gain in the S&P 500 Index. Bank of America (NYSE:BAC), however, has not been an active participant until recently. The shares are down more than 16% in 2010 despite a whopping 10% jump over the past week.
Bank of America (NYSE:BAC) may look as though it is headed higher from a late-August bottom, but one options trader isn’t sure if the shares will continue moving higher or will snap back lower. They do appear to expect a dramatic move, however, and seem to have expressed that thesis by scooping up longer-term long straddles.
Brokerage firm Susquehanna issued a slew of new ratings in the financial sector on Tuesday, with “positive/buy” ratings for some and “neutral” ratings for others. Bank of America (NYSE:BAC) earned a “positive” rating and moved higher on the day (the broad-market rally didn’t hurt matters). The brokerage said issues within the large-cap banking sector are trading at below-average multiple. What’s more, the covering analyst believes the impact of FinReg out of Washington has already been priced into the shares. In other words, it could be a sell the rumor, buy the news situation as investors return to the sector.
Jim Cramer, host of CNBC’s lively (and often controversial) Mad Money program, weighed in on Bank of America (NYSE:BAC) late last week. The pundit still calls the stock a solid buy and said that if financial regulation passes, investors won’t be able to “find bank stocks anywhere near where they are” so he encourages people to pull the trigger now. BAC is set to report earnings on July 16 (expiration Friday) ahead of the opening bell.
The S&P 500 started trading last Friday at the same level at which it closed on Monday of the same week. The Dow and NASDAQ were also flat on the week.
