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Today, we’ll try to establish a new bearish position in Bank of America (BAC). The market popped on news that polls in the U.K. show a lower probability for a “Brexit.” This is good, but it doesn’t negate the fact that one of the most significant risk events this year will take place on Thursday. Capital spending is flat, growth in Asia is contracting and the uncertainty in the U.K. has further hurt the European financial sector. We feel that today’s rally in the banking sector has a strong probability of resulting in a “bull-trap,” with prices declining again in the short term.

Already, BAC is falling back from a retest of its recent “double-top” formation, and we think the decline could send the stock back to February’s lows. We like an entry, but we don’t expect the back-and-forth to suddenly disappear either. We recommend setting expectations for a fairly quick trade if we get the correction that we expect in the short term.

‘Buy to open’ the BAC July 13.50 Puts (BAC160715P00013500) for a maximum price of $0.45.

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