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« What You Have in Common with King Nebuchadnezzar | Main | IAMGOLD Corporation An Opportunity Beckons »

Bank of America Heading South

BAC Chart 12 August 2009.JPG

Chart courtesy of Stockcharts

Today we placed an order to purchase the September 2009 PUT Options with a strike price of $16.00 for $1.00 per contract on The Bank of America (BAC) the symbol is BYOUP. They are currently bid $1.09 and asking $1.12 so our bid is on the low side but we will leave it in place and see how the week unfolds.

As we can see from the chart BAC has been on a very good run indeed and now looks to have peaked as the divergence between the stock price and the 200dma appears to be closing but still has a way to go. The RSI has been above the '70' level and turned south over the last few days along with the STO.

Bank of America has a market capitalization of $137.82 billion with 8.65 billion shares outstanding, a P/E ratio of 35.99 and closed up $0.08 today at $15.93. Bank of America trades on the NYSE under the symbol of BAC.

This series of options expires on 19th September 2009 so we will need to remain on the ball and be prepared to move quickly. If and when our order is filled we will place a sell order at $2.00 in the hope of making a 100% profit on the trade and then sit back and relax, all right, sweat a bit!

Your thoughts are of course most welcome.

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Reader Comments (11)

You picked the wrong day my friend. John Paulson just released he has acquired 168 million shares. Kiss your money goodbye.

August 12, 2009 | Unregistered CommenterJAghund

it's 53 cents right now after hours.

um whats going on?

August 12, 2009 | Unregistered Commenterjohn

Here's a better one... sell the uncovered $17 calls on the up day.

Keep cash reserves to buy the stock if it starts to carry any momentum upward. Best of luck to all bulls and bears.
Ironically both are chicago teams =)

August 12, 2009 | Unregistered CommenterJason


Dont worry about John, hes not scared of us!

August 12, 2009 | Unregistered CommenterGold Prices


In after hours trading BAC added another $0.57 or 3.58% to its stock price taking it to $16.50. As our order has not been filled we have submitted a cancellation request and will now wait until tomorrow to find out if it was accepted or not. If it was accepted then we will place another order at a slightly lower price depending on just how BAC is trading, if our order cant be canceled then we will have to play it the best we can.

News of John Paulson buying into BAC has had a very positive effect as per this news release:

August 12, 2009 | Unregistered CommenterGold Prices


Our order for the PUTS on BAC was indeed canceled so we live to fight another day. BAC which we mentioned jumped in after hours trading continued to rise today and gained 6.72% for the day to close at $17.00, all appears well in Bernankes world. So we will continue to watch BAC and maybe take another swipe at it down the line.

August 13, 2009 | Unregistered CommenterGold Prices

I followed your advice and bought SKF (ultrashort financials) and got a hit. Stay or quit?. I don't know which holdings it carries but for sure BAC is among them. I wonder if this is just a brief upbreak for financials or is sustainable. That's the problem of sailing in unknown waters. Luck!

August 13, 2009 | Unregistered CommenterToni


We do think that SKF is a good buy however we did not buy it as we prefer to target what we considered to be the most overbought banks in the sector in the hope that we would get a better return on our cash. The PUTS on USB are still up 23% btw.

August 14, 2009 | Unregistered CommenterGold Prices


SKF did well today up 7.63%, did you buy SKF or the options?

August 17, 2009 | Unregistered CommenterGold Prices

Buddy!. I stick with SKF after your last comments since I dont have the time and skills to enter the options game. Thanks for your words, cos I'm traveling by Uruguay and have limited time to surf the net. I wish you luck and hopefully we can make some money out of this current unconfident behaviour in the economy.
Kind regards

August 17, 2009 | Unregistered CommenterToni

They play good football (soccer) there.

August 18, 2009 | Unregistered CommenterGold Prices

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