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Similar to sector peer Citigroup Inc (NYSE:C), Bank of America Corp (NYSE:BAC) has struggled in 2014, with the shares down nearly 15% from their March 21 three-year high of $18.03. This downward trajectory is continuing today after Raymond James lowered its second-quarter earnings-per-share outlook for BAC by 3 cents to 29 cents, and at last check, the stock was off 0.9% to trade at $15.34. This may come as a disappointment to yesterday's batch of option bulls, who rolled the dice on a sharp move higher for the financial firm over the next several weeks.
On Tuesday, the equity's July 17 call was bought to open for a volume-weighted average price (VWAP) of $0.03. In order for the call buyers to profit, BAC needs to be sitting north of breakeven at $17.03 (strike plus VWAP) at the close on Friday, July 18 -- when front-month options expire, and two days after the firm reports second-quarter earnings. Gains will continue to grow with each step above here, while losses are limited to the initial premium paid, should BAC close south of the strike at expiration. Of note, Bank of America Corp (NYSE:BAC) has not seen the north side of $17 since early April.