JPMorgan Call Options See Wild Price Swings Ahead of Earnings

Luzi Ann Santos joined discussion · Jul 9, 2024 00:15

JPMorgan's options market is seeing increased volatility just days before the largest US bank report earnings, with the heaviest trading seen in call options with strike prices above the current stock price.

Shares of the financial giant climbed 21% this year, outpacing the S&P 500 index, as the company continued to grow earnings and boost dividends. $JPMorgan (JPM.US)$ has shown its financial might even amid tighter government regulations across the industry and mounting concerns that high interest rates could crimp consumer spending and force banks to set aside more money to cover potential credit losses.

Source: moomoo PC app

On average, analysts expect JPMorgan to report on Friday that its net interest income rose to $22.7 billion in the second quarter, from $21.9 billion a year earlier, according to estimates compiled by FactSet. Earnings, excluding unusual items, are seen reaching $4.47 per share for the period. The average estimate climbed from $4.13 a share a month ago, with 8 of the 15 analysts raising their forecast over the past month.

Still, Wolfe Research cut its rating on the stock to peer perform from outperform, noting that its strong performance could move some investors to take "some chips off the table," MarketWatch reported, quoting analyst Steven Chubak.

The potential for a correction on JPM is adding fuel to volatility in its stock options.

Call options that give the holders the right to buy JPMorgan shares at $215 by the end of the week attracted the heaviest volume Monday morning. Around noon in New York, about 2,720 calls already changed hands, more than two-thirds of the 3,760 open interest. The price of that call option swung from a gain of as much as 49% to a slump of up to 21%. At 12:11 p.m., the contract was down 17% to 39 cents.

Source: moomoo PC app

Chubak acknowledged that "JPM remains the largest and most well-run bank on the planet, street estimates are much too low, [and] excess capital remains best-in-class," even as he downgraded the stock, according to a MarketWatch report.

While the bank has been able to navigate challenging macroeconomic environment better than its peers, Chubak said JPMorgan still faces the risk of a lower net interest income, according to the report.

Share your thoughts on JPMorgan below.

Disclaimer: This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Indexes are unmanaged and cannot be directly invested in. Past performance is no indication of future results. Investing involves risk and the potential to lose principal. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information regarding your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty regarding its adequacy, completeness, accuracy, or timeliness for any purpose of the above content. See thislinkfor more information.

Options trading entails significant risk and is not appropriate for all customers. It is important that investors readCharacteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.

Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more