š£ Bank of America Q2 Earnings Preview: Bulls Are Betting Big ā But Is It a Trap? š£
Earnings hit Wednesday ā with $BAC at a crossroads. Will Net Interest Income carry the quarter or will rising loan losses wreck the rally?
Bank of America ($BAC) is set to report Q2 earnings Wednesday, July 16 ā and while the headlines are cautiously bullish, the options market tells us the whales are making moves.
Between a blowout in trading revenue, solid NII, and a deeply discounted stock price⦠this could be a breakout moment ā or a bull trap.
Letās break it all down ā the fundamentals, the risks, and why big money is loading up š
š¼ Quick Earnings Snapshot
š EPS Estimate: $0.86 (+3.6% YoY)
š Revenue Estimate: $26.59B (+4.8% YoY)
š Net Interest Income (NII): $14.86B expected (+7.2%)
š° Book Value/Share: $36.85 (+6.5%)
š§ EPS estimates were just revised UP 0.8% in the past month. Quiet confidence? Maybe.
BAC has beaten earnings 4 straight quarters, with an avg. surprise of 6.6%. Historical post-earnings win rate: 64% since 2022.
š Whatās Working for BAC
ā NII Looks Strong
Rates held steady = deposit cost stabilization
Commercial, consumer, and real estate lending all solid
Sequential NII growth expected ā BAC guiding higher š
ā Trading Revenue Tailwind
Volatility in bonds, FX, and equities = client activity surge
BAC guided for mid-to-high single-digit trading growth
ā Book Value + Capital Efficiency
BV/share up 6.5% YoY
Tier 1 capital still solid at ~13%
59M digital users = sticky moat
ā Underwriting Comeback
IPO & bond issuance ramped in late Q2
BAC should benefit from rebound in capital markets flow
ā ļø What Could Wreck the Quarter
ā Investment Banking Still Soft
Mgmt guiding for >20% YoY decline
Zacks sees IB income down 15.6% to $1.32B
M&A still frozen under tariff and macro uncertainty
ā Nonperforming Loans Rising Fast
NPLs projected to hit $6.66B = +17% YoY
CRE and small biz weakness showing up
Could pressure credit costs and profitability
ā Efficiency Ratio Ticking Higher
Estimated at 64.5% vs. 63.9% YoY
Margins could be under pressure from opex creep
š Options Flow: The Bulls Are Loading Up š
On July 14th, options volume exploded ā and it wasnāt retail noise:
š Massive Call Sweeps:
Aug 15 $50C: 2,500 contracts @ $0.85 = $212.5K
Aug 15 $52.5C: 1,826 contracts @ $0.59 = $107.7K
Sept 19 $52.5C: 1,157 contracts @ $0.59 = $68.2K
š Multiple block and sweep trades across expirations
š All above average volume, traded near ask
š IV in the 25ā26% range ā steady but elevated
š” What this means: Institutions are betting on a bullish reaction, targeting the $50ā$52.50 range into August/September.
That lines up with historical post-earnings performance ā BAC averages a 0.94% gain over the next 10 days post-report.
š§ Final Word: Discounted Giant or Value Trap?
BAC trades at just 12x forward earnings, with a 2.4% dividend and robust digital scale. For long-term bulls, itās a case of buy the dips and ignore the noise.
But short-term? Tuesdayās report will test whether NII strength and trading gains can outweigh growing credit risk and weak IB.
Options flow says someone is betting big on upside ā but caution is warranted. If the numbers donāt clear the bar, we could see a fade fast.
š³ļø Engagement CTA
š¢ POLL: Whatās your $BAC earnings trade?
š² Long Aug $50C ā riding the flow š
š² Short $52.5C ā sell the news š
š² Buying shares on dip šø
š² Waiting for JPM, C, GS to lead first š§
š¬ Sound off below ā whatās your setup heading into BAC earnings? Letās get tactical š„