Have you been noticing the move in Goldman Sachs (GS, $92.85, up $4.88) this week? The stock is up $12 and added another 6% yesterday after the company said it will repay all $10 billion of the TARP funds it received by the end of this year. In the Weekly Wrap two weeks ago, I mentioned Goldman and JPMorgan (JPM, $24.54, up $0.50) as the only two “banks” I really trust as they appear to be number one and two in Wall Street’s mind as far as sex appeal.

I’ve been following both of them for a number of years and have mentioned them quite often in the blog. The financial stocks have been hard to “analyze” because there are so many moving parts and no one knows what the end result is going for many of the regional and national banks.

Look at Bank of America (BAC, $4.84, up $0.14) on Thursday. The stock traded over 750 million shares! That is almost as unbelievable as Michael Phelps hitting a tokemaster. Are you kidding me? Bank of America hit a low of $3.77 before sustaining a huge rally. BofA’s CEO bought 200,000 shares on Wednesday for about $4.80 and basically put a million bucks where his mouth is.

So what does this mean to us?

Goldman could be setting up for a run at $100. The February 100 calls (GSBT, $2.80, up $1.50) traded over 17,000 contracts and were up 118% on Thursday and could have been bought for under $1. If you can get in for under $3, they could run to $5.

JPMorgan’s February 25 calls (JSABE, $2.10, up $0.10) traded 8,700 contracts and may be worth a gamble up to $2.25.

If you really want to be in the middle of some option action, then you will love the Bank of America February 6 calls (BYOBF, $0.66, up $0.28) which traded as low as 22 cents. Volume in these call options topped 130,000 contracts. If you can get in for under 75 cents, hope for a run to $1.25 and get out quickly.

All of these are very, very speculative plays…

Oh yeah, I almost forgot about Visa (V, $53.74, up $4.61) which hit a high of $55.10 yesterday. Sweet Jesus. The February 55 calls (VBK, $1.40, up $0.75) hit a high of $2.15 and many of you got in for under a $1. If you sold after a double, good for you. Those who left the call options open, be careful and don’t give away your profits if the stock starts to fade.

Rick Rouse
Rick@OptionsMentoring.com