$BAC call buyers keep cashing in

Option traders doubled their money today in Bank of America, which has held up exceptionally well throughout the recent volatility.

On Dec. 28, Investitute’s tracking systems detected the purchase of 4,951 March $31 calls for $0.69 as part of a bullish spread with shares at $29.73. Open interest in the strike was only 177 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $1.50 today, more than twice their Tpurchase price. The stock rose 8.8 percent at the same time, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

BAC was up 1.58% today to close at $32.13. It was the bank’s second winning trade posted on Investitute in as many sessions.

(Disclosure: I am long BAC.)