BAC, Bank of America
Bank of America Corp. - As ever, options activity in BoA is sky-high. Today there is at least some fundamental news to drive the frenzy. The nation's largest bank by assets said its fourth quarter earnings would include a $2 billion impairment charge and a further provision of $3 billion following a settlement on its dispute over allegedly selling loans to Fannie and Freddie, the two behemoths acting as government sponsored entities in the nation's mortgage market. Shares in the lender rose around 5% to $14.00. Options activity in the January 2012 contract exhibited a little more confidence in prospects for BoA having agreed to settle by paying Freddie and Fannie $2.6 billion. Investors appear to have sold at least 1600 put options at 36 cents using the $7.50 strike while also promising to buy stock at $10.00 should shares close below that point in one year's time. The premium charged for that privilege today was 75 cents. There was still, however, demand for protection against a further lurch lower with investors paying $1.49 per contract at the same expiration $12.50 strike. Implied volatility on the stock headed marginally lower to 34.5%.