Blue-Chip Bank Stock Rises After Committing to Advancing Racial Equity

The equity remains down 28% this year, however

Digital Content Manager
Oct 8, 2020 at 9:46 AM
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The shares of JPMorgan Chase & Co. (NYSE: JPM) are up 0.8% at $100.51 this morning, after the investment and financial services bank announced new long-term commitments to advance racial equity and close the wealth gap. The press release stated the intentions are to "harness its expertise in business, policy and philanthropy and commit an additional $30 billion over the next five years to provide economic opportunity to underserved communities, especially the Black and Latino communities." As a result, the stock earned a price-target hike from Jefferies to $108 from $101.

On the charts, JPMorgan stock has been trading mostly sideways for the past several months, after an attempt to break out above the $116 mark in June fell short of its 200-day moving average. Now, the equity is struggling with overhead pressure at the $102 level and sports a 28.5% deficit.

Despite the aforementioned technical difficulties, analysts were optimistic towards the stock coming into today, with 10 of the 18 in coverage sporting a "buy" or better rating, and the remaining eight carrying a tepid "hold" or worse. Echoing this is the 12-month consensus target price of $115.90, which is a 16.2% premium to its current perch.

That upbeat sentiment is reflected in the options pits, where calls are popular. JPM sports a 50-day call/put volume ratio of 3.23 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the elevated 76th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

Investors looking to get in on JP Morgan stock's next move may want to consider options. The security's Schaeffer's Volatility Index (SVI) of 40% sits in the relatively low 22th percentile of its annual range. In other words, option traders are pricing in relatively low volatility expectations at the moment. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 86 out of a possible 100, implying that JPM has tended to exceed volatility expectations in the past year -- a boon for option buyers. 

 

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