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  • Banks continue to report, with Bank of America earnings slated for Monday
  • After mixed results from JPMorgan Chase, Morgan Stanley and Citi, the options market prices in about a 5% move in BAC shares
  • BAC has a history of beating on the bottom line, but three net-downgrades suggest bearish trends ahead of results

Bank of America (NYSE:) is a large-cap in the banks-diversified industry within the financials sector. It reports earnings on Monday, July 18, before the market opens.

The options market expects a move of 4.7%, or $1.40, in either direction. The expected earnings move is calculated by ORATS as the straddle price less the estimated remaining straddle value after earnings. The straddle is the price of a call plus a put at the same strike price close to the stock price at the shortest expiration.

Historically over the past 12 quarterly earnings announcements, the expected move compared with the actual move was outside of the implied range twice. In those cases, long straddles were profitable. The rest of the earnings moves likely yielded profitable short straddles.

The earnings per share estimate at the July 18 announcement is $0.78. The average of the past three July quarterly earnings has been $0.71, and the average of all quarterly earnings of the past three years has been $0.70. Actual earnings have beaten estimates in 11 of the past 12 quarterly earnings.

There have been two EPS upgrades in the past 30 days and five downgrades. BAC’s first-quarter earnings event had two upgrades and four downgrades in the 30 days before the announcement.

BAC Earnings Dashboard On ORATS:

Source: ORATS

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