Options Traders Flock to JPM Following Flurry of Bull Notes

JPM is trading at 11-month highs today

Deputy Editor
Jan 7, 2021 at 10:45 AM
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The shares of JPMorgan Chase & Co. (NYSE: JPM) are up 3.8% at $136.51 this morning to trade at 11-month highs, after several analysts chimed in with bull notes. Bank of America Securities called the stock "best-in-class," upgrading JPM to "buy" from "neutral." Meanwhile, Jefferies upped its target price to $152 from $110, and upgraded the stock to "buy" from "hold." The analyst has high hopes for bank stocks in 2021, citing a potential rise in debit levels, thanks to last night's Democratic sweep of the Senate, which in turn could cause interest rates and yields to rise. 

Coming into today, analysts were evenly divided on JPMorgan Chase stock, with eight sporting "buy" or better ratings, and eight saying "hold" or worse. Additionally, the 12-month consensus target price of $134.51 is a 1.2% discount to its current perch, indicating room for more upgrades and/or price-target hikes in the future.

JPM has enjoyed an impressive climb up the charts since its early November bull gap, with support from its 30-day moving average. The equity is back within striking distance of its pre-pandemic highs near the $139 level and just topped its year-over-year breakeven level. In the past six months, JPM has added over 50%. 

Today's upgrades have resulted in a flurry of activity in JPM's options pits. Already, 84000 calls and 24,000 puts have crossed the tape -- four times the volume typically seen at this point. Most popular is the March 150 call, followed closely by the January 2021 140-strike call, with new positions opening at the former.

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 33% sits in the 16th percentile of its annual range. In other words, option traders are pricing in relatively low volatility expectations at the moment.  

 

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