I've always known that Bank of America (NYSE:BAC) was a heavily traded stock, but it wasn't until today that I compared its trading volume to other big banks. Here's what I found:

Data source: YCharts.com. Chart by author.

This confirms what I thought. Yet I was surprised by how much higher Bank of America's trading volume is than the other banks. Its shares change hands at four times the velocity of runner-up Citigroup's (NYSE:C) on a typical day.

The comparison to Citigroup is apt because the banks are in similar positions. Both it and Bank of America lost so much money in the crisis eight years ago that they've had to focus on recovering ever since. This decimated shareholder value, and contributes to the fact that their stocks still trade for 40% discounts to book value.

The banks are similarly structured, too, offering both commercial and investment-banking products. And they're of approximately the same size: Bank of America has $2.1 trillion in assets on its balance sheet compared to Citigroup's $1.8 trillion.

This begs the question: If these two banks are so alike, what explains the fact that Bank of America's trading volume is four times that of Citigroup's? Or for that matter, of Wells Fargo's and JPMorgan Chase's?

The answer is much-less exciting than one might imagine. Namely, the reason Bank of America's shares trade at such a high velocity relative to these other banks is because its share price is lower. This makes it affordable for hedge funds and high-frequency traders to buy and sell a large number of Bank of America's shares.


Share Price*

JPMorgan Chase


Wells Fargo




Bank of America


*As of Aug. 8, 2016. Data source: Yahoo! Finance.

The numbers aren't exact, but the size of the difference between these banks' share prices corresponds roughly over to volume. For instance, Bank of America's shares trade at four times the rate of Citigroup's because the latter's shares are three times the price of the former's.

It's worth noting, as well, that Bank of America's shares don't trade at a high volume only in the context of bank stocks; its volume is also high when you look at the broader market. Shares of the North Carolina-based bank trade at a higher average daily volume than any other company on the S&P 500. The runner-up is Chesapeake Energy, shares of which trade hands at half the pace of Bank of America's volume.

The point here is that Bank of America is a volatile stock. It offers a lot of potential, but it's not for the faint of heart.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.