Options Traders Scoop Up Bank Stocks After Earnings

JPM, WFC, and BAC are all sporting modest year-over-year deficits

Managing Editor
Jan 13, 2023 at 11:58 AM
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Earnings season is officially underway, with several big bank names stepping into the confessional this morning. How did JPMorgan Chase & Co. (NYSE:JPM)Wells Fargo & Co (NYSE:WFC), and Bank of America Corp (NYSE:BAC) fare? While the results look good on paper, the stocks' subsequent performance has left a lot to be desired. 

Blue-Chip Banker Slowed by Recession Fears

Heavy hitter JPMorgan Chase's adjusted fourth-quarter earnings of $3.56 topped analyst estimates of $3.07, while revenue of $35.57 billion was higher than the estimated $34.34 billion. JPMorgan Chase stock was last seen 0.4% lower to trade at $139.04 though, after the company disclosed it had set aside $1.4 billion to prepare for a mild recession. The shares have taken a 18% haircut year-over-year, but have added 37% off their Oct. 12 bottom of $101.28.

At last check, over 48,000 options have changed hands, volume that's triple the average intraday amount. The January 140 call that expires next Friday is seeing notable buy-to-open activity today.

Options Bulls Unfazed by Wells Fargo Whiff

Wells Fargo's adjusted fourth-quarter earnings came in at 61 cents, lower than the 66 cent estimate from analysts. Revenue also fell short of expectations, sending WFC lower by 2.2% to trade at $41.88. The shares are off by 25% in the last 12 months, but a short-term floor is forming at $40.

Wells Fargo options are flying off the shelves. Over 100,000 contracts have changed hands in the first hour of trading, volume that's quadruple the average intraday amount. The January 40 put is getting a lot of attention, which will be interesting to watch in the next week.

Net Interest Income Bites Bank of America

Bank of America's adjusted fourth-quarter earnings and revenue both topped Wall Street's forecasts. However, the stock was last seen off by 1.5% to trade at $33.92, weighed down by net interest income that fell below expectations. Sticking with the theme--BAC is down 30% year-over-year, with several short-term trendlines keeping a lid on recent gains. Also of note: Bank of America stock is trading right at its post-earnings bull gap levels from October

Over 230,000 BAC contracts have been traded this morning, volume that's also four times the average intraday amount. The January 35 call is one to watch, given the stock's current perch.

 

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