JPMorgan Chase (NYSE: JPM), the  New York  based banking behemoth is facing mounting losses related to derivatives trade,  may see the realized loss far about the $2 billion already mentioned in the  media.

CNBC News noted that someone  familiar with the matter stated JPMorgan found themselves staring at a  worst-case scenario that pegged the ultimate losses related to unwinding the  trade put on by a U.K. trader at as much as $9 billion.  The trader, nicknamed the “London Whale” will dent the firm’s second quarter  results, but likely won’t push them negative. Chief Executive Officer Jamie  Dimon and the executive team has refused to benchmark the exact size of the  losses, but has mentioned that the second quarter will still be “solidly  profitable.” In addition, it’s possible the firm won’t have to unwind all the  trades at once and realize all the losses, it is quite possible that some of the  derivative trade losses could fall on paper before closing the position, or even  wait it out where possible.

Analysts estimate that the bank  will generate $22.4 billion in revenue for this quarter and about $3.5 billion  in net income, assuming trading losses that Dimon has publicly pegged at more  than $2 billion, according to figures compiled by Thomson. The firm’s stock slid  throughout the day Thursday, following the New York Times story suggesting that  the losses could total $9 billion.

Dimon has suggested that the $2  billion-plus Whale losses, generated by London trader Bruno Iksil, could double for the  second quarter, ballooning the total three-month loss to more than $4 billion.  While this loss is enormous, the bank’s results will likely also be helped by  improvements in the housing market which has limited loss reductions and  write-offs. JP Morgan Chase continues to face a public relations nightmare due  to immense losses on risky investment propositions, but this likely won’t slow  the firm’s progress.

The firm’s stock continues to trade at very attractive  levels and many institutional investors are taking long positions at these  discounted values. The firm is an earnings machine and while these derivative  trades will hamper 2012 results, they won’t derail the  firm. The key damage will likely be to the firm’s perception and the franchise brand (including Dimon’s). Up to this even, Dimon had been widely regarded as the beacon of hope on Wall Street who was above the fray. Now, it seems even the house that he built may have some cracks in it.