Earnings season for the second quarter of 2024 are underway. Earnings season gives individual stocks the most volatility, and for good reason. If traders are wrong about how a company’s performance is playing out, big moves can be made in shares.
Earnings season typically kicks off with data from the big Wall Street banks. They’ve seen extra scrutiny recently, thanks to the fact that inflation has remained high, as have interest rates.
Both tend to weigh on a bank’s profitability. While a bank is happy to lend at high rates, investors haven’t been interested. In turn, inflation remains stubbornly high. Yet banks are faring well in today’s challenging environment.
Banking giant JPMorgan Chase (JPM) took a slight hit on Friday after reporting reasonable results. But CEO Jamie Dimon also warned on inflation and interest rates remaining higher for longer.
Action to take: Dimon’s warning likely resulted in shares selling off needlessly. The bank is still reasonably valued at less than 13 times earnings. Plus, at current prices, shares also pay a 2.2% dividend.
For traders, shares will likely resume their long-term uptrend. The September $215 calls, last trading for about $2.80, could see mid-to-high double-digit returns in the months ahead. Traders may want to look to take quick profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.