Friday November 20, 05:47 PM
STOCKS NEWS US-Massive BofA call fly suggests bullish stance
Stocks on the move
Real (Frankfurt: BJU.F - news) -time Equity news
U.S. stock market report
1219 ET Huge BofA call butterfly spread suggests bullish view
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Bank of America (NYSE: IKJ - news) shares rose 3 cents to $16.11 in afternoon trade.
In the options patch, one investor appeared to have utilized a $20-$30-$40
butterfly call spread to position for more bullish movement in BofA shares by
January 2011 expiration. The trader established the spread by buying 50,000
call options at each of the $20 and $40 strikes for $1.82 and 12 cents,
respectively, for the wings. The body of the butterfly was sandwiched between
the wings through the sale of 100,000 calls at the $30 strike for 37 cents,
said Frederic Ruffy, options strategist at WhatsTrading.com. The net debit of
the trade was $1.20 per fly. By selling the $30 strike, the investor is bracing
for shares to move towards $30 during 2010, almost double the current stock
value, Ruffy said. The break-even for the trade is $21.20 by January 2011
expiration.
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