Option Trade 
JPMorgan Chase & Co. (NYSE:JPM) Calls
Wednesday, July 05, 2017

** OPTION TRADE: Buy the JPM Sept 15 2017 95.000 CALL at approximately $2.00. Place a pre-determined sell at $4.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

Also Note: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

by Ian Harvey   

JPMorgan Chase & Co. (NYSE:JPM), which is engaged in investment banking and financial services, is expected to report earnings on Friday 14 July, before the market opens. The report will be for the fiscal Quarter ending Jun 2017. Based on 7 analysts' forecasts, the consensus EPS forecast for the quarter is $1.60. The reported EPS for the same quarter last year was $1.55.

Analysts expect that JPMorgan Chase & Co. will report full-year earnings of $6.69 per share for the current year, with EPS estimates ranging from $6.48 to $7.00. For the next year, analysts anticipate that the firm will report earnings of $7.63 per share, with EPS estimates ranging from $7.10 to $8.05.

After passing both rounds of this year's stress tests, the nation's biggest bank by assets said its board has cleared a $19.4 billion addition to its common stock repurchase plan. That's nearly double the amount that JPMorgan Chase's board approved last year. It also exceeds the size of similar plans at other major banks.

The bank's moves come on the heels of the Federal Reserve's announcement on Wednesday that all 34 of the nation's biggest banks passed this year's Comprehensive Capital Analysis and Review, or CCAR. This is the second phase in the annual stress tests, the first being the Dodd-Frank Act stress tests, or DFAST.

Oppenheimer's technical analyst Ari Wald said Monday that he recommends owning financials, and mentioned JPMorgan Chase & Co. as one of them.

 JPMorgan Chase & Co. has a 12 month low of $57.05 and a 12 month high of $93.98. The stock has a market cap of $293.56 billion, a PE ratio of 12.72 and a beta of 1.49. The firm has a 50 day moving average of $85.91 and a 200-day moving average of $86.27.

Influencing Factors to Consider

JPM stock suffered a break of critical support ($83) in late May that quickly morphed into a bear trap. Traders also refer to this pattern as a false breakdown or fake-out. Any and all bears that shorted the break were quickly dealt losses when JPM stock launched right back above support. This failed setup arguably aided the stock’s recent rise.

The other action of note is JPMorgan’s ability to hold the month’s upside break. The 50-day moving average and descending trend-line both reversed from resistance to support. Provided JPM can remain above the 50-day, the path of least resistance is undoubtedly higher.

Presently there is a target price of $93.92 set for JPM, a figure which is below the most recent high set by the stock. The stock also has a beta of 1.18.

JPM has created a positive sentiment when measured over the past 30 days. JPM has outperformed the S&P 500 by 31.23.

Analysts and Hedge Funds Opinions

Bank of America Corporation restated their outperform rating on shares of JPMorgan Chase & Co. in a report published last Wednesday morning. The firm currently has a $99.00 price objective on the financial services provider’s stock.

Several other analysts have also recently commented on the company…..

  • Vetr upgraded JPMorgan Chase & Co. from a buy rating to a strong-buy rating and set a $97.82 target price for the company in a research note on Wednesday, April 12th.
  • Credit Suisse Group AG increased their price objective on JPMorgan Chase & Co. to $99.00 and gave the stock a “buy” rating in a research note on Wednesday, March 15th.
  •  Jefferies Group LLC reissued a “buy” rating and issued a $94.00 price objective on shares of JPMorgan Chase & Co. in a research note on Wednesday, March 8th.
  •  Instinet increased their price objective on JPMorgan Chase & Co. from $82.00 to $83.00 and gave the stock a “hold” rating in a research note on Wednesday, March 1st.
  • Finally, Barclays PLC restated an overweight rating and issued a $100.00 target price on shares of JPMorgan Chase & Co. in a research note on Monday, March 20th.

Several institutional investors have recently made changes to their positions in the stock…..

  • State Street Corp raised its position in shares of J P Morgan Chase & Co by 7.5% in the fourth quarter. State Street Corp now owns 169,177,566 shares of the financial services provider’s stock valued at $14,598,334,000 after buying an additional 11,844,085 shares during the last quarter.
  • FMR LLC raised its position in shares of J P Morgan Chase & Co by 19.4% in the fourth quarter. FMR LLC now owns 96,587,143 shares of the financial services provider’s stock valued at $8,334,505,000 after buying an additional 15,715,835 shares during the last quarter.
  • Norges Bank acquired a new position in shares of J P Morgan Chase & Co during the fourth quarter valued at about $2,897,377,000.
  • Dimensional Fund Advisors LP raised its position in shares of J P Morgan Chase & Co by 1.2% in the fourth quarter. Dimensional Fund Advisors LP now owns 27,903,541 shares of the financial services provider’s stock valued at $2,407,756,000 after buying an additional 340,065 shares during the last quarter.
  • Finally, Dodge & Cox acquired a new position in shares of J P Morgan Chase & Co during the fourth quarter valued at about $2,297,616,000.

Harvey’s Options Volatility Indicator

Conclusion

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the JPM Sept 15 2017 95.000 CALL at approximately $2.00. Place a pre-determined sell at $4.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

 

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