BofA Times an Options Trade Well
Bank of America profited from a big options bet it made on an alcohol-company stock days before the beverage maker announced an acquisition in which the bank was the lead lender.
Note : BofA dit avoir respecté le "Chinese Wall" entre ses départements, et ne peut croire qu'il n'en a pas été ainsi.
Bank of America said it maintained the "Chinese wall" it has to prevent confidential deal information from reaching employees in other divisions.
"We have no reason to believe there was any sharing of inside information" between the investment bankers who were involved in financing the deal and the traders who executed the options trade, said a spokesman for the bank.
Options give owners the right to buy or sell underlying stocks or assets at a set price by a specific date. Traders pay a fraction of the cost of the shares, called a premium. "Call" options bet on a stock rising; "put" options wager on a stock falling.
Regulators have moved to scrutinize successful options bets before big deals. Criminal and civil authorities are investigating a profitable options bet on H.J. Heinz Co. stock by an unidentified trader shortly before a $23 billion buyout of the ketchup maker last month.
In addition to its call-options position, Bank of America said it bought put options on 133,100 Constellation shares as part of a strategy to be directionally neutral on the stock. However, the bank's loss from the puts would have amounted to a tiny fraction of its profit from the calls.
Bank of America said it also sold Constellation shares short at the time, which put a bigger dent in its profit from the call options. The bank declined to say how many shares it sold short or when.