JPMorgan Stock Chart Invites Bullish Options Trading

The bank stock recently breached its lower Bollinger Band

by Josh Selway |

Published on Sep 13, 2017 at 3:08 PM

The stock chart for JPMorgan Chase & Co. (NYSE:JPM) is looking quite bullish at the moment. Shares of the banking giant just bounced from the 100-day moving average, and also experienced a series of closes below their lower Bollinger Band. A similar setup occurred back in mid-May and early June, and resulted in a massive upside rally for JPM. Add to this the fact that bank stocks in general have been strong, and it would seem all signs are pointing up for the security. 

jpm stock

Options traders have been betting bullishly, too. The stock has a 10-day call/put volume ratio of 1.92 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ranking in the 77th annual percentile. In other words, call buying has been very popular in recent weeks. 

Plus, the stock has a Schaeffer's put/call open interest ratio (SOIR) of 0.74, which is just 15 percentage points from an annual low. This means short-term options traders are more call-skewed than normal. 

One option that's seen heavy buying recent weeks is the October 92.50, where 12,338 contracts were added to open interest during the past 10 days. Those buying to open the calls are expecting JPM shares to rise above $92.50 by the close on Friday, Oct. 20, when the contacts expire. It's been almost one month since they've explored this territory. 

And call volume is booming today, too. In fact, calls are trading at a whopping 27 times the expected pace, thanks to heavy interest in the weekly 9/29 97.50-strike call, where 4,779 contracts have traded. Buy-to-open activity is possible here, so these bulls would be eyeing a move to $97.50 by next Friday's close, when the weekly series expires. 

It certainly seems like a good time to target near-term options. This is according to the security's 30-day at-the-money implied volatility of 17.1%, which ranks in the bottom one-third of all readings from the past year. Put differently, volatility expectations appear unusually low at the moment. 

If JPMorgan stock does continue to rise, it could be in store for bullish analyst attention. More than half the analysts tracking the shares still consider them just a "hold," despite their nearly 37% year-over-year gain. It wouldn't be surprising to see extended JPM upside met by a round of upgrades. At last check, the equity was trading at $91.01. 

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