|Shares hit a new 52-week low of $6.01 Tuesday.|
NEW YORK ( TheStreet) -- Bank of America ( BAC) is attracting big bets from options traders as the stock set a new 52-week low early Tuesday of $6.01 per share even as other stocks posted big gains.
"There is a lot of buying activity in Bank of America driving option prices higher, whether people are hedging or speculating, whether they're bullish or bearish, they're really really pressing in a very large move in either direction," says Dan Passarelli, founder of Market Taker Mentoring, an options education company. Passarelli noted an unusually active trade in short dated "out-of-the-money" options, suggesting traders see the potential for a big move in the stock in a short period of time. Long-dated options have also been active, Passarelli says. For example, there were open trades on 115,000 puts expiring Nov. 4, compared to roughly 2,000 options trades on similarly long-dated out-of-the-money options on JPMorgan Chase ( JPM). Bank of America's public relations team was out on the offensive, trying to combat the negative sentiment. An article by Business Insider founder and former Merrill Lynch technology stock analyst Henry Blodgett argued in a posting on his website that the bank could see "a $100-200 billion hit to Bank of America's $222 billion of equity capital," the bank sent out a statement accusing Blodgett of making "'exaggerated and unwarranted claims' which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003." The bank argued Blodgett's analysis was way off, and that "the mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines." The hedge fund wasn't identified. Bank of America spokesman Larry DiRita, who, according to the blog "zero hedge," is the author of the bank's statement, did not respond to an e-mail message from TheStreet. -- Written by Dan Freed in New York.