Is JPMorgan Chase & Co. (JPM) on the Brink of a Breakout?

JPMorgan Chase & Co. (JPM) has historically outperformed in September

Sep 2, 2016 at 11:45 AM
facebook twitter linkedin

JPMorgan Chase & Co. (NYSE:JPM) is up 0.5% at $67.54 amid dimming rate-hike expectations, and has been stair-stepping higher for most of 2016. Since bottoming in early February, the bank stock has advanced a brow-raising 28.6%. And, from the looks of it, history is hinting at a near-term breakout for the shares.

Earlier this week, we took a look at the best stocks to own in September. Sure enough, JPM is on the list. The bank stock has been positive in eight of the past 10 Septembers, and on average, has gained over 2% during the month. A repeat performance would put the shares on the doorstep of their early November annual high, at $69.03.

With JPM trekking steadily higher in recent months, it comes as no surprise that options players have been buying to open calls over puts. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.35 calls for every put during the past two weeks -- a ratio that outstrips two-thirds of all others from the past year.

Now seems to be a near-perfect time to purchase premium on short-term JPM options, too. Earlier, the stock's 30-day at-the-money implied volatility fell to an annual low of 14.9%. On top of that, the bank stock's Schaeffer's Volatility Index (SVI) of 17% rests in the bottom 9% of all readings from the past year, hinting at relatively muted short-term volatility expectations.

A couple of other factors could lift JPMorgan Chase & Co. (NYSE:JPM) shares, too, from a contrarian point of view. First, seven analysts still rate the bank stock a "hold" or worse, leaving room for potential upgrades. Second, short interest climbed nearly 26% to 31.7 million shares during the most recent reporting period, meaning there's sideline cash available for a possible short-squeeze situation.

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!




These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!


Common mistakes options traders make


Special Offers from Schaeffer's Trading Partners