Bank stocks like JPM and MS have had a tumultuous year
Investors are eyeing the bank sector today, after CNBC last night reported that another downgrade from Fitch Ratings may be in the works. The firm, which recently weighed in on the overall health of the banking sector, said individual downgrades to some of the top financial names in the U.S. could be inevitable.
JPMorgan Chase & Co (NYSE:JPM) is 1.5% lower to trade at $152.42, putting a dent in the stock's 15.4% year-to-date lead. JPM is distancing itself from its July 31 annual high of $159.38, though the $150 level -- which coincides with its 40-day moving average -- could step up as a floor.
Put traders look like they're speculating on more losses are to come. Already, more than 10,000 puts have been traded, volume that's double the amount typically seen at this point. New positions are opening at the most popular contract, the August 148 put.
Morgan Stanley (NYSE:MS) is also suffering today, sporting a 1.3% loss and trading at $86.17, at last glance. Contrary to its sector peer, Morgan Stanley stock sports a much more modest 2.7% lead in 2023, and is 5.1% lower over the last 12 months.
An unwinding of options traders' optimism could add even more headwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 50-day put/call volume ratio of 2.39 that stands higher than 96% of readings from the past year. Echoing this, Morgan Stanley stock's Schaeffer's put/call open interest ratio (SOIR) stands in the lowest percentile of annual readings.