BAC – Bank of America Corp. – Trading traffic in Bank of America calls this morning suggests some options players are looking for shares in the name to continue to climb this week. BAC is the strongest performer in the Dow Jones Industrial Average today, with shares up nearly 3% during the first half of the session to $10.89, the highest level since July 2011. The stock has gained 120% since this time last year. Bullish traders positioning for BAC shares to extend gains snapped up calls that have four full trading sessions remaining to expiration. The Dec. 21 ’12 $11 strike calls changed hands more than 40,000 times in the early going, with most of the volume purchased by traders for an average premium of $0.08 apiece. Upside call buyers appear to be adding to positions established on last week. Time and sales data suggests some 32,000 of the $11 strike calls were purchased on Friday for an average premium of $0.04 per contract. Meanwhile, fresh interest is building in the Dec. 21 ’12 $11.5 strike calls, with some 7,700 call options in play versus open interest of just one contract. Most of the $11.5 strike calls appear to have been purchased this morning for an average premium of $0.02 each. Buyers of these contracts stand ready to profit at expiration should shares in BAC rally another 5.8% over the current price of $10.89 to exceed the average breakeven point at $11.52.
C – Citigroup, Inc. – Shares in Citigroup are trading 2.8% higher this afternoon at $38.66 on an up day for U.S. equities and a strong day for financial stocks. Citi shares touched a new 52-week high of $38.74 during the first half of the session, marking a near 60% move to the upside for the stock since this time last year. Traders anticipating higher highs in Citigroup shares by year end snapped up 2,200 calls at the Dec. 28 ’12 $39 strike for an average premium of $0.51 apiece. Call buyers may profit at expiration next week should the price of the underlying rally another 2.2% to exceed the average breakeven price of $39.51. Shares in Citigroup last traded above $39.51 back in July 2011.
AEGR – Aegerion Pharmaceuticals, Inc. – Options on biopharmaceutical company, Aegerion Pharmaceuticals, Inc., are more active than usual this morning after one strategist established a sizable bull call spread in the January 2013 expiry. Shares in AEGR are down 1.0% on Monday afternoon to stand at $21.88 as of 12:15 p.m. ET in New York trading. The options player responsible for most of the volume in AEGR calls today appears to be extending bullish sentiment on the stock, banking gains on a position established back in November and initiating a fresh position in the January expiry options. It looks like the trader originally purchased 1,250 calls at the Dec. $20 strike for a premium of $1.60 apiece back on November 15th, and today sold those contracts at a premium of $1.95 apiece for a net profit of around $0.35 per contract. Next, the strategist appears to have purchased a 1,250-lot Jan. 2013 $25/$35 call spread for a net premium outlay of $0.95 each. The bull call spread positions the trader to profit should shares in AEGR rally 19% over the current price of $21.88 to top the breakeven price of $25.95 by expiration, with maximum potential profits of $4.05 per contract available in the event Aegerion’s shares surge 37% to top $30.00 at January expiration.