Financial jump leaves BoA and WFC floundering

  Today’s tickers: BAC, GE, PRU, WFC & DLTR BAC – Bank of America – Speculation on the viability of Bank of America to withstand the current depression came to a head with more intense speculative selling of its shares today. We can hardly say that today’s new share price low is out-of-the-blue, but it is amazing just how quickly speculation intensifies on behemoth financial names. Already having shed two-thirds of its value so far in 2009, BAC is down 14% at $4.05, while frenzied option trading has seen volume of 300,000 contracts in the first 75 minutes of action. Implied options volatility has surpassed the 215% prior panic value and today is 16% higher at 220% compared to yesterday’s reading. The activity does show more put buyers than sellers in general, which does indicate that speculators are looking at a horrible end to this story. The Feb 2.5 and 4.0 strike puts have around 40,000 volume each with breakevens for buyers seeking downside protection against further share price losses at $2.27 and $3.25 respectively. On the call side the 6.0 strike expiring in two weeks is the single most active contract, where more than 50,000 options are in play. A slug of 10,000 were recently sold to the bid at 38 cents, but the broad picture is balanced here. However, as we look out over time, there is a healthy does of optimism apparent at the 10 strike calls for January 2010, where the bias among the 14,000 contracts that have so far changed hands is tilted towards bulls who anticipate a share price of $10.71 by that time. GE – General Electric – What are we supposed to make of a fresh 52-week low for shares at General Electric today at $10.66? Currently down 2% at $11.04 we’re unsure what the options market is telling us given the fact that one quarter of today’s volume can be attributed to a 50,000 lot sale of puts with a striking price of 9.0 expiring in February. While the trade is recorded at a mid-market price of 28 cents, we can see that puts were subsequently left offered at the price hinting that the undertone was bullish. Shares would therefore need to collapse by 21% from current before a seller starts to feel any losses from taking delivery of shares at the strike. Elsewhere, in the June contract one investor sold 10,000 calls at one…