Traders keep making bank on $BAC

Bank of America has been the target of huge bullish option bets for months, and the positions paid off again today.

On Sept. 13, Investitute’s market scanners showed that 25,000 Weekly $24.50 calls that expire this Friday were purchased in one print for $0.32 with shares at $24.27. This was clearly a new position, as volume was more than double the strike’s open interest of 10,051 contracts.

Those calls traded up to $1.12 this afternoon, 3.5 times their original price. The stock rose 4.2 percent in the same time frame, illustrating how options can far outperform their underlying shares.

It was the third winning BAC call trade in this same expiration posted on Investitute in less than three weeks. Investitute co-founder Pete Najarian, who has been profiting from the bank trade for several months, continued to cite the strength in Bank of America and other financial names this evening on CNBC’s “Fast Money” program.

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 2.42 percent to $25.41 today. The banking giant gapped higher this morning on renewed hopes for tax reform and rising interest rates.