4 Trade Ideas for Bank of America: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Bank of America, $BAC, comes into the week at resistance and an all-time high. It has an RSI deep in the bullish zone with the MACD positive and level. There is no resistance above 62.25. Support is at 61 and 60.25. Short interest is low at 1.4%. The stock pays a dividend with an annual yield of 2.06% and will trade ex-dividend beginning September 4th.

The company is expected to report earnings on October 14th. The August options chain shows largest open interest at the 57.50 put then the 60 strike. On the call side it is largest at the 65 strike then 62.50. In the September chain open interest is biggest at the 50 strike put then 55. On the call side it is biggest at 65 then 60. Finally in the October chain open interest is biggest at the 45 put. On the call side it is largest at 60 but spread from 55 to 65.

Bank of America, Ticker: $BAC

Trade Idea 1: Buy the stock on a move over 62.50 with a stop at 60.

Trade Idea 2: Buy the stock on a move over 62.50 and add an August 61/58 put spread (73 cents) while also selling the October 70 call (50 cents).

Trade Idea 3: Buy the August/September 65 call calendar (48 cents) while selling the August 58 put (32 cents).

Trade Idea 4: Buy the October 57.50/65/70 call spread risk reversal (52 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday, which heading into the July FOMC meeting and the biggest week of earnings season, sees equity markets remaining unsettled as the continued capex growth hits hyperscalers hard.

Elsewhere, look for Gold to continue the short term downtrend but with Crude Oil reversed to the upside and rising. The US Dollar Index looks to continue to hold at the very top of the 15 month range while US Treasuries continue to threaten to break down through support in consolidation to nearly 3 year lows. The Shanghai Composite looks to continue the confirmation of a reversal to a downtrend while Emerging Markets hang on by a thread in their uptrend.

The Volatility Index looks to continue in the normal zone after a threat of a move higher keeping at least a slight tailwind behind equities. They could use that as the charts of the SPY and the IWM are showing cracks on the shorter timeframe. The QQQ is worse printing a 2½ month low followed by the IWM at a 1 month low with the SPY holding the strongest. They all continue to look strong on the longer timeframe consolidating at the highs, with possible cracks leaking into the QQQ and IWM. Use this information as you prepare for the coming week and trad’em well.