With the election right around the corner, we think banks are offering an extra spicy setup.
Bank of America $BAC is the perfect vehicle to express a bullish thesis on this theme.
The primary trend has recently shifted higher, and price has been consolidating in a triangle since it peaked back in July.
Our volatility squeeze indicator (weekly) has crossed higher off an extreme low, suggesting some big momentum could be coming.
If we get a valid resolution from this multi-week coil, the follow-through move should earn us a quick double.
And then we’ll have the election reaction which will dictate whether we book a big gain on the remaining position.
That is why we are only going out to December with these calls. It gives us about three weeks to get the move we're looking for, and allows the election to be the catalyst for it before the theta decay window kicks in.
I also like how cheap these calls are.
Here's the play:
We are buying the $BAC 12/20 $46 calls for approximately $0.40 per contract.
The ideal scenario here is a quick double and a free ride into some potential election fireworks.
