By David Russell, reporter at OptionMonster
OptionMonster's tracking programs detected unusual activity in both large-cap stocks Tuesday in what appeared to be "Hail Mary trades" by money managers who have missed out on the recent rallies. These are cheap long-shot bets that will help them save face if the market continues to move higher.
In Bank of America, activity focused on the February 12.50 calls, which saw more than 31,500 contracts trade in volume well above the strike's previous open interest of 4,056, indicating new activity. They initially fetched 1 cent but then ratcheted up to 8 cents as the buying persisted and the shares climbed.The bulls turned to Procter & Gamble next, snapping up more than 16,000 March 80 calls for 8 cents. This was clearly new positioning as well, as that strike's open interest was just 1,139 contracts at the start of the session. Calls lock in the price where investors can buy shares. They can generate huge leverage if the stocks move in the right direction but will expire worthless if shares decline or don't climb far enough and fast enough. Bank of America shares jumped 3.25% to $12.24, at one point hitting a 21-month high of $12.34. Its February 12.50 calls expire this Friday, so those buyers are looking for a quick move to the upside. Procter & Gamble rose 0.22% to $75.98. Its March 80 calls have 4-1/2 weeks before they run out of time. Russell has no positions in BAC or PG.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV