Bank of America (BAC, $7.67, up $1.40) had another fantastic outing as the stock added another 22% today. Talk about having a tiger by the tail. The stock started higher right out of the gate and continued its upswing throughout the session after the company’s CEO said BofA could repay the $45 billion government TARP loan by late 2009 or early 2010, depending on the economy.

BofA closed above $7 for the first time since late January and got an added lift after the Federal Reserve announced plans to buy up to $300 billion of long-term Treasury notes. By doing so, the Fed is showing its commitment to pump money into the financial system and encourage lending.

After the Fed news, the stock continued its rally and closed at its high. In after-hours trading as I type, the stock is up another 28 cents to $7.95.

Now for the best part.

The May 6 calls (BYOEF, $2.75, up $1.10) were entered at 75 cents on 3/11/09 and as of today’s close that represents a return of 267%! I have been talking about protecting your profits with this one all week and it would be prudent to set stops at $2.50 RIGHT NOW if you haven’t done so already.

The July 10 calls (JLWGB, $0.95, up $0.42) surged 80% today and we had an exit target of 60 cents. With today’s huge gain, you should now raise the exit target/ stop to 80-85 cents. The total return for this trade is 217% and a stop of 90 cents gets you a 200% return.

If the stock holds it gains in after-hours trading then these call options could continue to do well. Just remember, if you sell half of the position at 200% it means you made a 100% on your original investment and you could let the rest ride until May and July which is when these options expire. The May 6 call options are now in-the-money by $1.67 (stock price minus the 6 strike price) so they should move nearly dollar for dollar if BofA continues up.

These are tough choices because greed can take over here and all it takes is one bad day or a 20% drop in the stock to take a big dent out of these profits. Keep that in mind and at least close half of your position by the weekend.

I’m working on a big article for Dendreon (DNDN, $4.29, up $0.07) for Thursday’s blog and it could be one of those “special” option plays that only comes around a few times a year. I have talked about this stock in the past and you’ll be excited to read the update. Trust me.

Rick Rouse