Unusual Options Activity: JPMorgan Chase (JPM)

Wall Street megabank JPMorgan Chase (JPM) has rallied 35% in the past year, exceeding the returns of the overall stock market. One trader sees the potential for a further rally over the coming weeks.

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  • That’s based on the July 12 $205 calls. With 23 days until expiration, 13,453 contracts traded compared to a prior open interest of 314 for a 43-fold rise in volume on the trade. The buyer of the calls paid $1.10 to make the bullish bet.

    JPMorgan shares recently traded for about $194, meaning shares would need to rise by $11, or 5.6%, for the option to move in-the-money.

    The strike price of the option is right at the stock’s 52-week high of $205.88.

    Besides being considered “too big to fail,” JPMorgan has been performing well in a high interest rate environment. Revenues are up 11%, and earnings are up 6%.

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  • Plus, with shares still trading at 12 times forward earnings, a discount to the overall market, more upside for shares in the coming weeks looks likely.

    Action to take: Investors may like shares here, as the stock may be on the path to retest and break above its prior 52-week high. At current prices, shares pay a 2.3% dividend.

    For traders, the July 12 calls are aggressive, and may not move in-the-money before expiration. But traders can likely see mid-double-digit profits or better on a continued uptrend in the coming days.


    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.

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