$BAC bulls bank a winner

Bank of America (BAC) moved sharply higher to a new multi-year high today, delivering gains to bullish option traders.

On Nov. 4, Market Rebellion’s Unusual Activity Service detected the purchase of 5,000 Weekly $32.50 calls, expiring today, for $0.66 as part of a bullish roll with shares at $32.29. Volume was well above the strike’s previous open interest of just 1,304 contracts, showing that this was a new position.

Those calls have traded for as much as $1.27 so far today, nearly double their purchase price. The stock rose 4.61% in the same time period, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

BAC is up 1.99% to $33.77 in late-morning trading, just below the bank’s new multi-year high of $33.80 made earlier this session.