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Most Active Options Update: JPMorgan Chase & Co. (JPM)

JPMorgan Chase & Co. option trader bets on a big end-of-week bounce

by 4/15/2014 1:53 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is JPMorgan Chase & Co. (NYSE:JPM).


Traders have taken a risk-off stance to JPMorgan Chase & Co., since the financial firm reported dismal first-quarter earnings last Friday, with the stock down about 5.2% to trade at $54.41. What's more, the equity has encountered additional pressure from analysts, including today's $1 price-target cut to $64 at Goldman Sachs. In spite of this, speculators at the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have bought to open 29,648 calls on JPM over the past five sessions, compared to 17,839 puts.

In today's session, calls are trading at two times the typical intraday rate, and are outpacing puts by a more than 3-to-1 ratio. One speculator in particular appears to betting on a big bounce for the banking stock by the end of this holiday-shortened week.

The most active strike in JPM's options pits -- and the most active equity option thus far -- is the stock's April 60 call. The majority of the 46,228 contracts traded here were the result of one massive block of 43,776 that crossed the tape right out of the gate at the ask price of $0.02, hinting at buyer-driven volume. Meanwhile, implied volatility jumped 6 percentage points at the time of the transaction -- suggesting new positions are being initiated.

Looking at the charts, there is the potential for a near-term bounce in JPMorgan Chase's future. Amid the recent sell-off, the stock has fallen south of its lower Bollinger Band -- and brought its Relative Strength Index (RSI) down to 29 -- indicating the equity has entered oversold territory.

Off the charts, a number of financial firms will unveil earnings this week -- including Bank of America Corp (NYSE:BAC) -- and a round of well-received reports from JPMorgan Chase & Co.'s (NYSE:JPM) sector peers has the potential to create a halo lift for JPM. However, should JPM fail to topple the $60 mark through Thursday's close, when front-month options expire, the risk for today's call buyer is limited to the initial premium paid, or $87,552 (number of contracts x premium paid x 100 JPM shares per contract).


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