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Wednesday’s Vital Data: Bank of America Corp (BAC), SeaWorld Entertainment Inc. (SEAS) and BP plc (ADR) (BP)

Options activity provides a look at expectations on BAC, SEAS and BP

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U.S. stock futures are in full retreat this morning, as Wall Street is shaken by escalating tension between the U.S. and North Korea. Yesterday, North Korea threatened missile strikes against the U.S. territory of Guam after President Donald Trump promised “fire and fury like the world has never seen” if North Korea doesn’t stop threatening the U.S. The ratcheted up saber-rattling between the two nations has created considerable uncertainty for traders.

Wednesday’s Vital Data: Bank of America Corp (BAC), SeaWorld Entertainment Inc. (SEAS) and BP plc (ADR) (BP)At last check, futures on the Dow Jones Industrial Average had retreated 0.17%, Nasdaq-100 futures had lost 0.62% and S&P 500 futures were down 0.34%.

On the options front, volume ramped up on Tuesday, with about 16.8 million calls and 15.3 million puts changing hands. Meanwhile, the CBOE single-session equity put/call volume ratio slipped to 0.68, while the 10-day moving average held in four-month high territory at 0.68.

Turning to Tuesday’s options activity, Bank of America Corp (NYSE:BAC) saw increased call option speculation in the wake of a Goldman Sachs note predicting more dividend hikes for the banking sector. Meanwhile, SeaWorld Entertainment Inc (NYSE:SEAS) was flooded with puts after a weak quarterly report and evaporating attendance. Finally, BP plc (ADR) (NYSE:BP) was popular with call traders after the company announced a major natural gas discovery in Nevada.

Tuesday’s Vital Options Data: Bank of America Corp. (BAC), SeaWorld Entertainment Inc. (SEAS) and BP plc (ADR) (BP)

Bank of America Corp. (BAC)

Banks are undervalued, Goldman Sachs said in a weekly address this weekend. The brokerage firm believes that banking stocks like BAC will benefit beyond 2017 from momentum for deregulation and movements to return tens of billions of dollars to investors. If the recent trend continues, Goldman noted, “our banks analyst Richard Ramsden estimates that total capital payouts could grow at an average annual pace of 19% through 2020.” What’s more, Goldman said that stock repurchases at large banks like BAC will surge 45%.

BAC traders were in need of some good news, as the shares have languished below resistance for weeks. However, the boost wasn’t enough to push the shares north of $25, which has held BAC in check since March.

Options traders, however, chimed in with confidence. Volume on Tuesday rose to nearly 807,000 contracts, with calls snapping up 65% of the day’s take. However, not many are targeting a breakout before August options expire at the end of next week, as the August put/call open interest ratio currently rests at a mediocre reading of 0.73, indicating a lack of short-term bullish confidence in BAC stock.

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