Blue-Chip Bank Name Brushes Off Earnings Beat

Calls are running at double what's typically seen

Digital Content Manager
Jul 13, 2021 at 10:35 AM
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Another earnings season has started, with blue-chip bank name JPMorgan Chase & Co. (NYSE:JPM) among the first to step into the spotlight. The company reported first-quarter earnings $4.59 per share -- much higher than Wall Street's anticipated $3.10 per share -- as well as a 155% jump in profits. Contributing to these results was the release of loss reserves and a surge in deal making, though the bank also saw a sharp decline in trading activity from last year's record levels. At last check, the security is down 1.6% to trade at $155.42.

JPMorgan Chase stock has been struggling with overhead pressure at the $159 for the past month, after shares hit a June 2, all-time high of $167.44. Still, the equity has the support of the 120-day moving average, and boasts a healthy 61.8% year-over-year lead.

Analysts are mostly optimistic towards the security, with eight of the 13 in coverage carrying a "buy" or better rating, while the remaining five said "hold" or worse. Plus, the 12-month consensus target price of $167.23 is a roughly 6% premium to current levels.

The options pits echo that bullish sentiment, with an appetite for calls. This is per JPM's 10-day call/put volume ratio of 3.02 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the 77th percentile of its annual range. In other words, calls are being picked up at a faster-than-usual clip.

Despite the negative price action, that sentiment is only getting reinforced today. So far, 53,000 calls have crossed the tape, which is twice the intraday average. Most popular is the July 160 call, followed by the 157.50 call in the same series, both of which expire at the end of the week.

Now may be a good opportunity to speculate on JPMorgan Chase stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 23% stands in the 15th percentile of readings from the past 12 months, indicating options players are currently pricing in low volatility expectations.

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