JPMorgan -7%, $205 Options Flying After Fed Reserve Increase News
$JPMorgan (JPM.US)$ shares fell nearly 7% on Tuesday to $201 after news that the Fed would possibly raise reserve rates for the largest financial institutions to 9%- up from rumors of 5% reserves heard in June, but below the 19% originally proposed, according to Yahoo Finance. The massive drop was the largest intraday drop in JPM since 2021, after the stock had climbed about 18% so far in 2024.
The drastic change in stock price sent JPM to the top ten spot for high stock options volume in the market, at 219K contracts trading on Tuesday alone. According to moomoo option data, the largest volume by strike price on JPM options are Calls and Puts expiring this week, at $205. 5.84k contracts enable holders to buy JPM at $205, 5.68k contracts changed hands that enable holders to sell JPM at $205.
The new reserve rule, dubbed "Basel III endgame," is a revision to the reserve rules first proposed after the collapse of Silicon Valley Bank in 2023, when the tech darling bank experienced a bank run. The initial rules were to ensure middle-sized regional banks with $100B -$250B in AUM had more strict requirements, as they were more likely to default on assets. SVB had defaulted on its $172B in holdings, according to Reuters.
According to Bloomberg, reserve requirements on regional banks were removed, and instead, these mid-sized firms would have to record unrealized gains and losses. The rules are not finalized, just revised and proposed to regulatory agencies like the OCC and FDIC to examine, Fed Vice Chair for Supervision William Barr said in a speech to the Brookings Institution.
Looking at individual contracts, $215 Calls saw the highest trading volume on Tuesday, trading at a current price of around 7C for 100 shares.
The entire Banking - Diversfied industry sector fell about 3% Tuesday, with names like $Citigroup (C.US)$ falling 4%.
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Kevin Travers
Moomoo News and Community Manager
Moo moo News and Community Manager, NJ Office.
Fmr CNBC contributor, reporter/investor/trader
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105742796 Learner : Market is volatile
Alen Kok : o
Laine Ford : maybe like the stock
webguybob : But why?
Malik ritduan : ok
104247826 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
龙邦第一财子 : alright