8:00am (EST)
We have a Trade Alert for BAC ahead of this morning’s open so let’s go check the details.
Trade Alert!
Bank of America (BAC, $28.16, down $0.88)
BAC June 27 puts (BAC230616P00027000, $0.77, up $0.30)
Entry Price: $0.55 (5/2/2023)
Exit Target: $1.10
Return: 40%
Stop Target: 60 cents (Stop Limit)
Action: Set an initial Stop Limit at 60 cents to start protecting profits and to avoid a loss.
Shares tested a low of $27.71 with the puts peaking at $1.02. Prior and upper support from the start of April at $27.75-$27.50 was breached but held. Lowered resistance is at $28.50-$28.75.
We wanted to get into a financial stock following another round of selling pressure in the regional banks. BAC’s inability to clear its 50-day moving average on Monday and drop below $29 on Tuesday were bearish signals. We are looking for a retest towards $26.50-$26.25 with the March 24th 52-week low at $26.32.
If shares fall below $26, the trade will make triple digits as the puts will be at least a $1 in-the-money with some time premium built in. A close back above $29 will likely take us out of the trade for a decent profit.