Celebrating BAC's Earnings with Strangle π
Hello, fellow tigers! Today, I want to share how I celebrated $Bank of America(BAC)$ recent third-quarter earnings report with a well-timed strangle position.
Q3 Highlights
In the third quarter, BAC reported earnings per share (EPS) of $0.90, surpassing the analyst consensus estimate of $0.83. Additionally, the bank's revenue for the quarter came in at $25.2 billion, slightly ahead of the consensus estimate of $25.13 billion. These impressive results provided a strong foundation for my investment strategy.
BAC Daily Chart
With the stock price that closed at $26.99, it's important to note that BAC had faced some challenges, with a -14.83% decline over the last three months and a -22.62% dip in the past year. Despite these hurdles, I saw an opportunity to capitalize on the volatility surrounding BAC's earnings.
My strategy involved using a strangle position, which is a popular options strategy where you simultaneously sell a call and a put option with different strike prices and the same expiration date. In this case, I sold a BAC call with a strike price of 30.0 expiring on November 10, 2023, and a BAC put with a strike price of 24.0, also expiring on the same date.
Here's my analysis of how I captured profits with this strangle position:
Sold BAC Call 20231110 30.0
As BAC's stock price was at $26.99, I believed it was unlikely to surge above $30.0 in the short term.
Selling the call option allowed me to generate premium income upfront, which I could keep if the stock stayed below the $30.0 strike price.
Sold BAC Put 20231110 24.0
With $JPMorgan Chase(JPM)$ showing resilience by beating earnings estimates, I had confidence that BAC wouldn't fall significantly below $24.0 after its earnings report.
Selling the put option let me collect additional premium income, further boosting my potential profit.
As of now, my $BAC 20231110 30.0 CALL$ is currently showing a gain of 69.77%, and my $BAC 20231110 24.0 PUT$ has gained 60.45%. These gains are a testament to the effectiveness of the strangle strategy, as it capitalizes on the uncertainty and volatility surrounding earnings reports.
However, it's important to remember that options trading carries its own set of risks and complexities. Strangle positions can result in losses if the stock doesn't move as anticipated, so it's crucial to have a clear risk management strategy in place.
In conclusion, celebrating BAC's strong Q3 earnings with a strangle position was a rewarding experience. It allowed me to capitalize on market volatility and leverage my own analysis to generate substantial gains. Always remember to conduct your own research before embarking on similar options strategies. Happy investing! [Miser]
Disclaimer: My views and insights are provided for informational purposes only. I do not offer financial or investment advice. Itβs essential to conduct your research before making any financial decisions. The volatile nature of financial markets necessitates caution and due diligence. [Observation]
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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The bigger risks are in consumer unit. YoY deposit volume is flat, but interest expense has gone up nearly 6 fold in 2023 vs 2022, and will get worse in 2024. Meanwhile provision expense for credit losses has more than doubled, and both delinquency and charge offs are over π― % higher this yearβ¦trending worse in 2024.
Anyone know if they clarified how they are going deal with unrealized losses in its bond portfolio? Curious if they just let them age out or is FED helping. If so how?
Wow, the volume today is insane! It's like a battleground out there, and it seems the buyers totally nailed it! π₯πͺ The market is buzzing with action, and it's music to my ears as a small-time investor. πΆπ
Oh man, Bigmoney, I'm freaking out about the potential losses on BAC! This is giving me major anxiety. π°πΈ I've got a sinking feeling that I'm gonna get crushed here. π« It's just so nerve-wracking to watch my hard-earned cash go down the drain. ππ°
I mean, seriously, I don't put a lot of faith in bank earnings. π ββοΈ I vividly remember the nightmare of 2009 when banks had those supposedly low P/Es, and then bam, they were declared insolvent! π€ It's like, how can we trust those numbers when the financial world can flip upside down in a heartbeat? π₯πΈ
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