Bank of America Earnings Preview: Options Market Signals a Muted Reaction

Bank of America (NYSE:BAC) stock has pulled back from its August high, mirroring the performance of most American banks. It peaked at $65 before dropping to $52.10 last week as investors focused on the upcoming third-quarter earnings report.

Bank of America to Publish Strong Earnings

BofA, the second-biggest American bank by assets, will publish its financial results on Wednesday. These results are expected to show that its business continued doing well in the third quarter. 

The average estimate among analysts is that its revenue rose by 8.89% to $30.58 billion, with its earnings-per-share rising modestly to $1.1. 

Its last earnings report showed that its revenue rose by 15% to $31.6 billion, driven by its investment banking division whose figure rose by 50%. Its sales and trading revenue rose by 33%, while the asset management fee jumped by 20%. 

Most notably, its customer deposits rose 2% during the quarter, while the provision for credit losses fell to $1.4 billion from $1.6 billion in the second quarter of 2025. The bank also returned $8 billion to shareholders through dividends and share buybacks. It is currently executing a $40 billion buyback program and recently raised its dividend by 14%.

The company’s biggest challenge is that the investment banking business is not growing as initially expected. Dealmaking dropped by over 40% in the third quarter from the second, with Bank of America expecting its investment banking revenue to drop by 10% during the quarter.

Options Market Predicts Muted BAC Stock Performance

The options market does not expect a big move in Bank of America’s shares after the earnings report. That is in line with the stock’s recent reactions to earnings. It rose just 2.77% after its last report and less than 2% after its first-quarter report.

The company has an implied volatility of 39%, slightly higher than its historical volatility. Most of the calls are at $56, slightly higher than the current $54, while most of the put options are at $53. 

Technically, the stock has been in a downward trend after peaking at $65 earlier this year. It bottomed out at $52.26, slightly above the 100-week Exponential Moving Average (EMA). 

It has formed a small hammer candlestick pattern at the Point of Control (POC) of the fixed range volume profile. This pattern suggests that the stock may rebound after the earnings report. If this happens, it may jump to $60 in the coming months. 

Bank of America stock chart | Source: TradingView

This is in line with the average estimate among analysts. JPMorgan, Truist,  and UBS have a target of $62, while Rothschild has a target of $72.

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