Put selling on Bank of America drags share price from its lows

Today’s tickers: BAC, AA, ATVI, GE, ISIL & HBC BAC – Bank of America. – The ongoing decline in the price of shares at BoA is prompting option speculators to take the opposite side of the trade as they appear to be happy writing premium through put sales. Shares have rebounded since we noted put sales dominating this morning’s activity and are off just 3% now at $11.08 having touched $10.70 earlier. Today’s price action values the company at its lowest point since the November 21 low. However, options implied volatility at 105% is little changed on the day indicating no acceleration of fear. In the February contract we noted sales at both the 7.5 and 10 strikes. Puts at the latter strike where sold for premium of 1.09 indicating a naked seller would get dragged under water at share prices below $9.91 by expiration. Elsewhere there was some demand for calls at the 15 strike where investors paid 29 cents for buying rights. AA – Alcoa Inc. – Fourth quarter earnings from aluminum producer Alcoa were anything but shining. Reporting a fourth quarter loss of $1.19billion in the past year, times certainly look bleak for the Pittsburgh based behemoth. Citing a laundry list of factors leading to their poor performance, it would seem that Alcoa is far from seeing the light at the end of the tunnel, with decreasing prices of metals and plunging demand for industrial materials, excess capacity seems inevitable. As demand from their major end-users such as automotive giants GM and Ford continue to decline, and Alcoa’s margins increasingly diminish, investors fear that this situation may continue to snowball. While investors knocked a further 5.3% off Alcoa’s market capitalization following last night’s earnings to $9.52, option traders seemed to increase their appetite for put options reserving selling rights at the 7.50 series where they paid a 41 cent premium for more than 7,000 contracts. Open positions there currently amount to 12,776 contracts. Implied volatility subsided by some 15% to stand at 89%. ATVI – Activision Blizzard Inc. – News that the maker of Guitar Hero has scooped an exclusive deal with legendary rock ‘n roller, Bruce Springsteen hasn’t helped shares at Activision today, which are 0.5% weaker at $9.06. Springsteen will make his video-game debut when his new album is released to be coincided with a TrackPack that allows game-buyers to download a fresh song along with his famous hit single, “Born…