Showing posts with label BAC. Show all posts
Showing posts with label BAC. Show all posts
Thursday, December 8, 2011
Friday, August 12, 2011
Trade of the Day: Bank of America (BAC) February 2012 $12/$14 ratio call spread
The Trade
Trader executed the February 2012 $12/$14 ratio call spread 20,000x for a $.05 debit, $100,000 total. Maximum risk is unlimited, equal to going short at $16. Maximum profit potential is limited at $14 to $3,900,000.
Analyzed solely based on direction, the trade is clearly bullish. However, the real premise behind the trade is that it favors a decrease in implied volatility. This trade looks to see current implied volatility levels of roughly 56% to decrease somewhere near historical levels in the low 30% range. The trade is also positive theta, meaning that it profits from premium time decay.
The graph below shows the profit potential of the trade assuming implied volatility decreases to 31%.
*Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!
No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.
Tuesday, July 12, 2011
Wednesday, May 25, 2011
Trade of the Day: Bank of America August $13/$10 bull risk reversal
The Trade:
A trader put on a bull risk reversal using the August $13/$10 options for a 1 cent credit, 4,700x.
A trader put on a bull risk reversal using the August $13/$10 options for a 1 cent credit, 4,700x.
Monday, April 25, 2011
Follow Up: BAC - Right Now (Bank of America Inc.)
Wanted to take a quick second to do something we don't usually do, which is review a previous post and connect some dots. Today BAC made the move many were anticipating - a break above the declining tops line and a run towards the gap. I'm disappointed to say that despite having stalked this trade, I did not cash in nearly as much as I would have liked. The move off the open was sharp and quick and I would have preferred to buy the early pull back. One axiom we hear a lot is the market moves in the direction that hurts the most people. Quicker moves like this can often be indicative of shorts getting squeezed. The rapid buying and the lack of sellers causes a bit of a panic and that looks like what might have happened today.
Here's a look at how it went down.
I'm not sure BAC is done basing, but it will be very telling of short interest if it gets squeezed into the gap tomorrow. If it does get into the gap, I will most likely be looking to fade the gap fill for a quick trade. Good luck, and remember to stay light and tight.
Here's a look at how it went down.
I'm not sure BAC is done basing, but it will be very telling of short interest if it gets squeezed into the gap tomorrow. If it does get into the gap, I will most likely be looking to fade the gap fill for a quick trade. Good luck, and remember to stay light and tight.
Thursday, April 21, 2011
BAC - Right Now
Here's what I am watching
Baby break of today's opening range (bullish bias but not overwhelming)
Gap up above that could draw price higher
Declining tops line resistance
Divergence in price and MACD over 3 days that makes me wonder if a near term bottom is forming.
Good luck!
Baby break of today's opening range (bullish bias but not overwhelming)
Gap up above that could draw price higher
Declining tops line resistance
Divergence in price and MACD over 3 days that makes me wonder if a near term bottom is forming.
Good luck!
Wednesday, April 20, 2011
A Quick Look at the Charts : BAC (Bank of America) & C (Citigroup Inc.)
Experimenting with posting a few 60 min charts here. Let us know how you do/do not like it...
A quick look at the charts - Bank Of America and Citigroup Inc.
Thursday, March 3, 2011
Trade of the Day: Short 5,000 Citigroup Inc Jan 13 5.5 straddles
Today one strategist sold 5k Jan 13 5.5 straddles for $1.95. (*Note there is some debate weather the trader went synthetically short or shorted the straddle but for education purposes lets assume they sold the straddle.)
Max risk is unlimited, max gain is the credit of $1.95 per spread or $975,000. The spread is short vega (volatility), short gamma, long deltas (right now), and the passage of time helps.
Lets take a look at the risk reward:
This trade is very interesting to me because this trader doesn't lose money between 3.55 & 7.45! Plus he is short volatility which has been on the high side post crisis and ought to come down to the mid 20's unless the economy has an outside shock or double dips (which is always possible). Below is a chart that shows the profitability zone:
No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.
Max risk is unlimited, max gain is the credit of $1.95 per spread or $975,000. The spread is short vega (volatility), short gamma, long deltas (right now), and the passage of time helps.
Lets take a look at the risk reward:
This trade is very interesting to me because this trader doesn't lose money between 3.55 & 7.45! Plus he is short volatility which has been on the high side post crisis and ought to come down to the mid 20's unless the economy has an outside shock or double dips (which is always possible). Below is a chart that shows the profitability zone:
No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.
Tuesday, February 8, 2011
WFC trades 2X its daily average
Wells Fargo (WFC) traded 129,121 options today, 94,688 calls and 34,473 puts vs a daily average of 65,483 options, 37,088 calls and 28,395 puts. Traders added 844k deltas in the calls and -168k deltas in the puts.
The print that caught my eye was a buyer of 10,000+ in the money March 32 calls this morning. After these prints hit the tape the stock never looked back.
There was also a diagonal short calendar spread where a trader sold 2500 of the March 35 calls @ $0.64 and bought 2500 of the Feb 34 calls @ $0.60. This trade is profitable above $34.17 tomorrow and above $34.73 on expiration day. This is a professional trade to be long deltas, long gamma, and short vol, for a credit of $0.04. Here is the risk/reward for tomorrow:
As you can see in the chart below WFC is testing its highs from April of 2010. This is very interesting when you compare it to the other big banks. JPM, GS, C, MS, AIG, BAC, USB, PNC and of course XLF are all below their 2010 highs.
The print that caught my eye was a buyer of 10,000+ in the money March 32 calls this morning. After these prints hit the tape the stock never looked back.
There was also a diagonal short calendar spread where a trader sold 2500 of the March 35 calls @ $0.64 and bought 2500 of the Feb 34 calls @ $0.60. This trade is profitable above $34.17 tomorrow and above $34.73 on expiration day. This is a professional trade to be long deltas, long gamma, and short vol, for a credit of $0.04. Here is the risk/reward for tomorrow:
As you can see in the chart below WFC is testing its highs from April of 2010. This is very interesting when you compare it to the other big banks. JPM, GS, C, MS, AIG, BAC, USB, PNC and of course XLF are all below their 2010 highs.
Friday, January 28, 2011
Trade of the Day: BAC May 15/12 bull risk reversal
Trade of the Day:
BAC May 15/12 bull risk reversal
A trader sold 10,000 BAC May 12 puts at .42 and bot 10,000 May 15 calls at .54 for a net debit of .12 or $120k. As you can see from the risk/reward graph above the trade breaks even at $15.12 and has unlimited upside. The downside risk is that the trader will be put into BAC at $12 if the stock is trading at or below $12 by May expiration. BAC recently bounced off of its rising 50dma @ 12.40ish this past Monday but is still below is 200dam @ 14ish. BAC closed at 13.6.
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