The November Federal Open Market Committee (FOMC) meeting is underway, and that means pins and needles for stockholders in investment banks like Bank of America Corp. (NYSE:BAC). We all know an interest-rate hike from the Fed is coming … eventually. But for Fed Chairwoman Janet Yellen to announce one just days ahead of the presidential election and data on October’s nonfarm payroll report seems more than a bit ambitious. Investors in BAC stock may have to wait just a bit longer.

In fact, CME Group’s FedWatch is pricing in only a 6% chance of a rate hike this week. As for December … well, things get interesting, with a 75% chance of a rate hike of 0.50-0.75 basis points.

Unfortunately, this situation leaves BofA traders in the lurch for another month … or does it?

Bank of America Sentiment and Charts

While BAC stock dipped following the Fed’s inaction last month, the shares ultimately found support near $15 and moved steadily higher. In fact, Bank of America is up nearly 9% since hitting a post FOMC meeting low on Sept. 27.

Click to Enlarge This time around, Bank of America stock has already met with a short-term correction after the shares retreated from resistance near $17 to test support at $16.50 and the equity’s 10-day moving average. Could there be weakness following tomorrow’s non-event from the Fed? Certainly, but look for any pullback to be halted near $16, if not sooner.

In fact, if BAC stock goes to $16 following the Fed, I’ll be surprised, as expectations are already set for the Fed’s announcement, and sentiment is quite favorable for the shares.

For instance, Zacks reports that 12 of the 18 analysts following BAC stock rate it a “buy” or better, with no “sell” ratings to be found. Furthermore, the 12-month price target has risen since Sept. 23 from $17.31 to $17.95, as the brokerage community reassesses its take on BofA’s potential. Look for additional potentially target hikes on any hawkish interest-rate commentary from the Fed.

Turning to the options pits, we find a wealth of optimism centered around on the December FOMC meeting, which takes place on Dec. 13-14, just ahead of Dec 16 series options expiration. At last check, the December put/call open interest ratio rested at 0.5, with calls doubling puts among options set to expire next month.

A closer look reveals constrained expectations, however, with peak call OI totaling 194,000 contracts at the in-the-money $16 strike, while peak put OI numbers 100,000 contracts at the out-of-the-money $15 strike — likely representing put-sell activity.

As for Dec 16 series implieds, options are pricing in a potential move of about 4.6% heading into expiration. This places the upper bound at $17.26, while the lower bound lies at $15.74.

2 Trades for BAC Stock

Call Spread: Traders looking to play the December FOMC reaction for Bank of America might want to consider a Dec 16 series $17/$18 bull call spread.

At last check, this spread was offered at 31 cents, or $31 per pair of contracts. Breakeven lies at $17.31. A maximum profit of 69 cents, or $69 per pair of contracts, is possible if BAC stock closes at or above $18 when December options expire.

Put Sell: For those looking for a more stable return — or with less bullish aspirations for BAC stock — then a December $15 put sell may fit the bill.

At last check, this put was bid at 14 cents, or $14 per contract. The upside to this put sell strategy is that you keep the premium as long as BofA closes above $15 when these options expire. The downside is that should BAC trade below $15 ahead of expiration, you could be assigned 100 shares for each sold put at a cost of $15 per share.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.