Bulls banking big bucks in $BAC

Traders scored huge wins in Bank of America today as money continued to flow into the financial sector.

On Nov. 22, Investitute’s tracking systems detected heavy buying in two strikes expiring on Jan. 5: 6,500 Weekly $27 calls were purchased in one print for $0.67, and 3,790 Weekly $28 calls were bought for $0.33. These were all new positions, as there was no open interest in either strike before that session began. Shares were around $26.70 at the time.

Today the Weekly $27 calls traded for $2.17 and the Weekly $28s sold for $1.37, respectively more than 3 and 4 times their purchase prices. The stock rose 8.6 percent in the same time frame, showing 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 was up 0.94 percent to $29.05 today, back near the 52-week high of $29.31 reached Tuesday. The bank has rallied sharply along with other major lenders on the prospects of new tax legislation and rising interest rates.