Weekly Options Trading Accelerates on JPMorgan, Goldman Sachs Stocks

Bank stocks like JPMorgan and Goldman Sachs have struggled in recent weeks

Josh Selway
May 30, 2017 at 1:24 PM
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The 20 stocks listed in the table below have attracted the highest weekly options volume during the past 10 trading days. Stocks highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names of notable interest are bank stocks JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group Inc (NYSE:GS), as pressure from Italian banks spreads to the U.S. Here's a quick rundown of how options traders are placing bets on shares of JPM and GS. 

most active options

Options Traders Bearish on JPM Stock

JPMorgan stock has given back 1.1% today to trade at $84.40, with the shares on pace for their first close below their 150-day moving average since last July. But while JPM stock remains stuck below its year-to-date breakeven level near $86, it has continued to find support in the $84 neighborhood since December. 

In the options pits, put buying has been unusually popular relative to call buying in recent weeks. For instance, JPMorgan has a 10-day put/call volume ratio of 1.12 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks above 89% of readings from the past year. 

One option that's seen notable action during the past two weeks is the weekly 6/9 83-strike put, where nearly 2,300 positions were added. Data from the major options exchanges confirms almost exclusive buy-to-open activity here, meaning options traders are betting on JPM shares dipping below $83 by close on Friday, June 9, when the contracts expire. 

It's certainly a good time to buy JPMorgan options, too. This is according to the stock's Schaeffer's Volatility Index (SVI) of 15%, which is just 9 percentage points from an annual low. In other words, near-term options are pricing in unusually low volatility expectations at the moment. Plus, the shares have a Schaeffer's Volatility Scorecard (SVS) of 92, indicating the bank stock's tendency to outperform volatility expectations over the past year. 

Options Traders Target Calls on Underperforming GS Stock

Goldman Sachs stock has dropped 1.9% today, making it the top Dow loser, and was last seen trading at $218.64. The shares have been hitting a series of lower highs since mid-March, with the descending 50-day moving average now applying overhead pressure. 

Options traders have remained bullish, however. GS' 10-day call/put volume ratio of 1.74 at the ISE, CBOE, and PHLX ranks in the 63rd annual percentile, meaning calls have been bought to open over puts at an accelerated clip. Of the weekly options that have yet to expire, the weekly 6/2 225-strike call saw the largest increase in open interest over the past 10 days, with 2,502 contracts added. Data from the major exchanges confirms some buy-to-open action here, meaning bulls are betting on GS stock closing this week above $225. 

It's also a good time to buy options on Goldman Sachs. The shares have an SVI of 17%, falling in just the 4th percentile of its annual range. Moreover, GS has an SVS of 98. 

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