The turn of the year brings hope for new themes and trends to strike the Street. But if you’re a financial stock lover, more of the same will do just fine, thank you very much. The Financial Select Sector SPDR Fund (NYSEARCA:XLF) closed out 2016 in bullish fashion with bank stocks from Bank of America Corp (NYSE:BAC) to JPMorgan Chase & Co. (NYSE:JPM) soaring into the Christmas season.
BAC stock closed out the year with an impressive 31% gain. What’s more, BofA scored the entirety of the gains after the November election. The first 10 months of the year were a bust for the entire financial sector.
With higher rates and deregulation on the horizon, the denizens of the Street are buying up bank stocks with abandon.
Bank of America has now climbed to an eight-year high. Indeed, the $20 level (which was breached during the post-election buying binge) has sat untouched since BAC shares plunged beneath it during the 2008 meltdown.
With mega-resistance now shattered, BAC stock holders are hoping a new bull market has begun — one with the mustard to carry shares higher for years to come.
At a minimum, spectators have to admit the weekly price chart of BofA looks better than at any time over the past decade.
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On the daily front, the stock is in bull flag mode. Of course, the recent chop can’t be too surprising given how overbought the stock had become following the financial stock explosion.
Fortunately for would-be buyers, a lower-risk entry is now in the offing.
How to Trade BAC Stock Here
If you think the good times keep rolling for Bank of America, consider grabbing the BAC April 22 calls for $1.68 or better. Fear has fled in the wake of the rousing rally. And that means options can now be snatched up on the cheap.
Your max loss is limited to the initial $1.68 and will be forfeited if BAC stock sits below $22 at expiration. The max gain is unlimited, which means you can continue banking coin on the back of BofA bulls.
As of this writing, Tyler Craig owned bullish positions on XLF.
