Bank of America (BAC - option chain) shares are rising today after the company's CEO, Brian Moynihan, told attendees at the company's investor day conference that he thinks BAC can earn between $35 and $40 billion a year in pretax earnings when its business normalizes. He also said that by 2013 the bank could be paying up to $12 billion a year in regular dividends. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on BAC.BAC opened this morning at $14.27. So far today the stock has hit a low of $14.20 and a high of $14.67. As of 12:40, BAC is trading at $14.63 up 0.60 (4.2%). The chart for BAC looks neutral and S&P gives BAC a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $13 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in two and a half months as long as BAC is above $13 at May expiration. Bank of America would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.
BAC has not been below $13 since December and has shown support around $13.80 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent controls bullish hedged positions in BAC.
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Reader Comments (Page 1 of 1)
3-08-2011 @ 3:36PM
ken said...
they are crooks
3-08-2011 @ 4:27PM
blief1 said...
ken - who exactly are crooks? Would that be me who lost 75% of the value of my stocks when the USA forced JP Morgan to take TARP money (even though it was not a distressed bank by anyone's measure). Or would the crooks be the pension funds and retirement accounts that were invested in financial institutions that were forced to loan money to people with no down payments and no hope of making their payments? Or are the crooks the people who borrowed the money thinking that home prices would double every 5 years so they could sell and take profits (on other peoples money). Really Ken - grow up and smell the roses - you have been sold a load of bull____ by the same folks who created the system that allowed the problem in the first place.
3-08-2011 @ 5:16PM
amldix said...
Bank of America is the most crooked bank I ever had to do business with, not only that but their customer service is awfull. They are counting on some big profits by robbing the members with enormous interest rate increases and changing due dates on credit cards without notice. even changing the month of a scheduled online payment to cause a default so they can collect late fees. They have also made up false information about my credit report so they wouldn't have to lower my interest rate. I know it because I had my credit report in front of me. I think this bank is going down, it's all a facade, they are hurting and getting desperate.
3-08-2011 @ 5:44PM
jheste9880 said...
They got bailed out by US even if we didn't want to, but our goverment did any way, but now all they are doing is taking advantage it, there not helping the people they are lying to us. The Attorny General has filed a suit against B of A in NV because of ther lies. They say they are going to help you get a modifaction but after the trial period they try to drag this on and then they come back to tell you that you don't qualify but you made the payments for 11 months, WE THE PEOPLE SHOULD HAVE LET THEM ALL FAIL. YOU GIVE STUPID PEOPLE A LITTLE AUTORITY AND THEY WANT TO PLAY GOD. WE ARE REAL PEOPLE TRYING TO MAKE IT JUST ASKING FOR A LITTLE HELP GO AHEAD AND RUIN THIS GREAT COUNTRY OF OURS.
3-08-2011 @ 11:46PM
John Wright said...
If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!
WHERE IS MY LOAN MODIFICATION BANK OF DESTROYING AMERICA!
BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled "Piggies" I invite you to listen to this song on youtube and see if it appropriately fits.
http://www.youtube.com/watch?v=ovD9rTzs2q4&feature=player_embedded
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
In their ties with all their backing
They don't care what goes on around
In their eyes there's something lacking
What they need's a damn good whacking.
Everywhere there's lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.
HAVE HAD ENOUGH AND I AM FIGHTING BACK!
Divided we might have fell America. UNITED WE MUST STAND!
I SUPPORT WRIGHT vs. BANK OF AMERICA, AND WE ARE FIGHTING BACK!
John Wright
piggybankblog.com
4-17-2011 @ 3:48AM
ceaserlionel said...
To the CEO of BankBoston
This letter is formal notice, to your bank and to all your partner banks, allowing you ten days to provide me a valid explanation that I can accept, although I cannot say sincerely that I assume one is available.
On October 22, 1997, you signed a contract between Biosite Inc. and BankBoston and its partners. This was a ten-year contract expiring on October 22, 2007, with a stolen patent suddenly and inexplicably presented to Biosite so that BankBoston received the grand honor of distributing, through Biosite, an extremely significant patented innovation stolen from Nogdan of Israel. The contract concerns a patented innovation of great import, unique in the world, which can isolate any protein at all from the genome a million times better, in terms of quantity, than any other of the world’s most modern technologies, and thus can produce human antibodies in a very short time, amounting to an hour or two instead of the 6 to 14 months required by the hybridoma method. The latter, invented by the founder of Biosite himself, Howard Greene, provides very expensive and unstable human antibodies, vulnerable to protein cross-reactions that consign the whole effort to the trash bin, but in the entire world there had been no other method.
This new, revolutionary patent, unique in the world, using blood and not inside the cell like the molecular technique, is US Patent no. 5,869,409, applied for in August 1993 and issued February 9, 1999. It happens that for this patent, with Ms. Rivka Zusman as inventor, all marketing and development rights were already assigned by Rivka Zusman on February 15, 1994, to Nogdan Immunochemicals Ltd. of Gilo, Jerusalem, consisting of four partners: the Zusman couple holding 50% and I, Roland Taieb, together with my wife Sarah Shoval, the other 50%. By this contract, complete global exclusivity in marketing belongs to Mr. Roland Taieb, i.e. to myself, with validity even confirmed, as of May 29, 2000, by the Supreme Court of Israel (whose irreversible decision I attach for you) as well as by a further legal decision, of November 19, 1998, which is very harsh and severe regarding any company dealing with the patented Nogdan innovation without the prior written consent of Mr. Roland Taieb.
Starting in September 1995, the Zusmans, together with their attorney Yair Green, met with Howard Greene of Biosite, a small company of no great value, traded on the Second Marché and selling an apparatus for detecting the level of swallowed or injected drugs. Nothing more! It happens that the Abbott company, of the USA, filed a complaint against Biosite for stealing the patent, on the grounds that the patent belongs to Abbott and was stolen from them by Biosite. Biosite paid $5.5 million in order to continue operations rather than close its doors. This is on record throughout Biosite. However, Biosite, the co-inventor of the hybridoma method, immediately licensed to others, for two years as of September 22, 1995, the patent stolen from Nogdan. Because the first results were so unique globally, Biosite had itself registered on NASDAQ as of February 12, 1997, and it was very well received on the market.
At the same time, since 1996, years of clinical trials were under way for Medarex Inc. and its transgenic mice. The trials all succeeded, as the mice provided human antibodies at a level of 100%, whereas Medarex had previously never exceeded 85% and thus had achieved nothing of value for medicines, vaccines, etc. On December 1, 1999, Biosite and Medarex quietly filed for a patent under which, using the extraordinary capabilities of the patent stolen from Nogdan, the mice would provide human antibodies at a level of 100% and thus change the face of the new medicine. The announcement was made worldwide through the media on December 6, 1999, and immediately Medarex exploded upward on NASDAQ by 3500% — absolutely unique in NASDAQ history! But Medarex was thoroughly concealing its Biosite connection and the stolen patent. It did not announce its collaboration with Biosite until June 1, 2000 (or two days after the Israeli Supreme Court’s decision!), which was six months after the successful murine experiments, so that the gigantic commercial success of Medarex and Abgenix would not have the stolen Nogdan patent as its one and only progenitor.
Medarex immediately lined up Abgenix (and subsequently Pfizer) to create a duopoly rather than retain a monopoly forbidden by American law, and it collected $39.7 million for being one of the world’s only two exploiters of a unique, but stolen, patent.
Then suddenly on October 22, 1997, BankBoston and its partners signed a ten-year contract with Biosite so that Biosite, with no explanation whatever, suddenly became the licensee of the patent stolen from Nogdan. Immediately on learning this, Johnson & Johnson acquired Biosite. We are demanding 3 thousand million dollars per year in indemnification from Biosite for their use of the stolen patent. The sum for the fourteen years between 1996 and 2010 is 42 thousand million dollars, but that is what they bought into. (A copy of their letter is attached.)
Moreover, more than 1200 laboratories around the world are using the stolen Nogdan patent and prospering enormously. All these companies have been warned via Fedex at least twice.
As of the start of August 2010, entire teams of attorneys will be doing everything possible to recover damages, with interest, from every company, and never less than 50% of their 2007 turnover.
More significant yet : In December 2004, Biosite notified us, in a registered letter — absolute proof — from the Biosite director-general of intellectual property, that they were the owners of prior art for this patent and that they were prepared to have the patent, which they had stolen from Nogdan, annulled! (His harsh but absurd letter is attached.) Admitting, beyond a possible doubt, that they were working with the stolen patent, they claim that it is theirs by virtue of prior art beginning in 1995. Our patent was filed for in August 1993, rendering their case hopeless.
For BankBoston, matters are more serious a thousandfold, because you and your partners are the largest American banks and it is neither admissible nor excusable that someone has cheated and misled you. Following are my two prescriptions, according to which I may or may not reduce my extremely firm demand for damages and interest amounting to $75 thousand million.
1) Explain, if you can, how such a patent, belonging to Nogdan, would be in your possession since 1997, when the patent was assigned its number only on February 9, 1999, so that in 1997 it was still held secret in the vaults of the US Patent Office.
2) Please provide me a list of the companies that signed for the patent with you, and a copy of the contracts.
In addition:
3) What is the exact role of Wellington and of Kopp? What about their millions of blocked shares? What are they doing, and on what authority?
4) If you refuse to cooperate, I promise I will have everything in your banks, and all your property, confiscated against the debt to us.
5) If you show good will, then the sum will be reduced in accordance with your good will because at least proof will exist that for your own part, you were also cheated.
I repeat that only ten days are allotted to you. We have lost too much of our time and money — from 1995 to 2010 is fifteen years — and we refuse to pointlessly lose more.
I await your prompt reply.
Roland Taieb
Marketing Manager
22 Zalman Shazar St., Ramat Poleg, tel : 972-9-8850635, fax : 972-9-8850685, cell : 972-522-516153