Order flow is important to gauge what is happening in a market, but as Adam Warner wrote in a previous post about WhatsTrading.com, you don’t know what to do with the information on large trades. Do you follow or fade? But it is a data point that brings, in this case, Bank of America onto your radar.
Could it be Dick Bove (shown) behind this trade?
BofA (BAC) is down 3 cents to $12.87 and fell 6.2 percent on the week, but some players in the options market expect strength over the next two months. BAC August 14 call option is today’s most actively traded contract, with 56K traded so far. Today’s trades include a “reverse diagonal spread”, where a strategist bought 15,000 August 14 calls and sold 15,000 January (2010) calls at the $20 strike. They paid 45 cents and are probably looking for a move beyond $14.45 by the August expiration, but not above $20 by mid-January.
…If you are interested in more info like this, check out WhatsTrading.com
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