Today’s tickers: JPM, GS, LVS & VSH
JPM – JPMorgan Chase & Co. – Shares in JPMorgan are on the rise today, trading up 0.90% to stand at $33.71 as of 11:15 am ET, but options trades on the banking institution suggest the rally is likely to be brief. Yesterday we noted the purchase of a sizable bearish put butterfly spread on JPM that may result in maximum potential profits should the stock cede 31% of its value come December expiration. Like-minded pessimists took to JPMorgan options today to position for the price of the underlying to pull back sharply in the months ahead. Near-term bears anticipating share price erosion before the week is out scooped up some 1,800 puts at the August $32 strike for a premium of $0.66 apiece, and purchased another 1,000 puts at the lower August $31 strike at a premium of $0.37 each. Buyers of the weeklies may be positioning for shares in JPM to drop should Bernanke’s words out of Jackson Hole on Friday fail to bolster financials. Traders long the puts profit at expiration if shares in the financial services provider slip beneath effective breakeven prices and fresh multi-year lows of $31.34 and $30.63, respectively.
Meanwhile, activity in longer-dated contracts suggests some investors are favoring the debit put spread strategy. One bearish player purchased the 2,500-lot November $18/$28 strike put spread at an average net premium of $1.26 per contract. The trader profits if shares in JPM tumble 20.7% in the next few months to breach the breakeven price at $26.74 by November expiration day. Maximum potential profits of $8.74 per contract are available to the strategist should the stock plunge 46.6% to $18.00 at expiration. Shares in JPM traded at lows of around $15.00 at the height, or rather depths, of…
