Unusual Options Activity: JPMorgan Chase (JPM)

Megabank JPMorgan Chase (JPM) is up about 10 percent so far this year, as regional banks have plunged into turmoil. One trader sees shares moving even higher in the coming days.

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  • That’s based on the July 28 $157.50 calls. With 10 days until expiration, 22,806 contracts traded compared to a prior open interest of 104, for a staggering 219-fold jump in volume on the trade. The buyer of the calls paid $0.59 to make the bullish bet.

    Shares recently traded near a six-month high of $149. For the option to move in-the-money, JPMorgan Chase shares would need to jump about 6 percent in the coming days.

    The bank trades at about 10 times earnings, a reasonable valuation. And as a too-big-to-fail bank, shares have a premium on their book value, with the stock going for about 1.6 times. But earnings and revenue growth has held strong, even amid the challenging market of the past two years.

    Action to take: Investors may like shares at current prices or on a pullback. The bank will likely continue to lead on total assets, and it earns a decent profit while doing so. Plus, shares pay a 2.7 percent yield at current prices.

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  • For traders, the July 28 options have little time to play out. But they could see mid-double-digit returns on a move higher in shares in the coming sessions.


    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 of the companies mentioned in this article.