Bank stocks are setting the tone this week, with a slew of upbeat post-earnings reactions propping up Wall Street. Morgan Stanley (NYSE:MS) and Bank of America Corp (NYSE:BAC) are two high-profile names leading the charge today, and options traders are along for the ride.
MS is 6% higher to trade at $164.92, after the bank reported adjusted third-quarter earnings of $2.80 per share on $18.22 billion in revenue, both of which exceeded estimates, with the former the largest beat in five years. The stock earlier hit a record high of $166.77, and is now 32.2% higher in 2025.
At last check, 52,000 calls have changed hands, volume that's 12 times the average intraday amount and more than triple the number of puts traded. Most of this attention is at the October 175 call, where new positions are being bought to open.
BAC is up 5.4% to trade at $52.69, a chip shot from its Sept. 23 all-time high of $52.88. The company reported adjusted third-quarter earnings of $1.07 per share on $28.24 in revenue, a top-line beat led by investment results. Prior to today's bounce, the stock was testing its 80-day moving average, and is now 20.2% higher year to date.
BAC has seen 244,000 calls change hands already today, volume that's seven times the average intraday amount and quadruple the number of puts exchanged. The October 52- and 54-strike calls are leading the way, and there's also buy-to-open activity at the December 57.50 call.
Options on both MS and BAC are sure to be popular in a post-earnings volatility crush. This is per their respective Schaeffer's Volatility Indexes (SVI) that rank in their respective 16th and 15th percentile of their annual range. Plus, with Schaeffer's Volatility Scorecards (SVS) at 91 and 81, both stocks have a history of exceeding option trader's volatility expectations during the past year.
