BAC – Bank of America Corporation – Straddle-strategists targeted weekly options expiring July 9 on Bank of America today with shares of the underlying stock currently trading lower by 1.70% to arrive at $13.78 as of 2:40 pm (ET). It looks like some investors expecting Bank of America’s shares to rebound slightly to settle at $14.00 by expiration next Friday sold straddles on the financial services firm. Options traders shed approximately 2,000 calls at the July 09 ’10 strike for an average premium of $0.30 each, and sold about 2,000 now in-the-money puts at the same strike for approximately $0.34 in premium apiece. Straddlers pocket gross premium of $0.64 per contract on the transaction and keep the full amount if BAC shares rally 1.6% to settle at $14.00 by expiration next Friday.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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