Regional bank Western Alliance Bancorporation (WAL) is up 37% over the past year, far outperforming the overall stock market. One trader sees further upside in the first half of 2025.
That’s based on the June 20 $100 calls. With 148 days until expiration, 4,291 contracts traded compared to a prior open interest of 157, for a 27-fold rise in volume on the trade. The buyer of the calls paid $5.80 to make the bullish bet.
Western Alliance shares recently traded for about $93, so shares would need to rally by $7, or about 7.5%, for the options to move in-the-money. Western Alliance would also need to break past its prior 52-week high of $98.10.
Shares have been trading in a range over the past few months, but with the economy looking strong, financial stocks could be set to outperform. Plus, Western Alliance trades at just 10 times forward earnings.
Action to take: The bank grew revenues by 12% in the past year, even amid the challenges of interest rate uncertainty. The stock is well positioned geographically, with a large presence in the Southwest and California.
Plus, at current prices, shares pay a 1.7% dividend.
For traders, the June $100 calls are well positioned for a rally in the first half of the year. Traders may want to take profits once the trade moves in-the-money rather than look to hold the position until expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.