DailyPlay – Opening Trade (JPM) – October 10, 2023

JPM Bullish Opening Trade Signal

View JPM Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 6 Contracts Nov 10th $146/$155 Call Vertical Spreads @ $3.16 Debit per contract.

Total Risk: This trade has a max risk of $1,896 (6 Contracts x $316) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $316 to select the # contracts for your portfolio.

Counter Trend Signal: This is a Bullish trade on a stock that found support and is expected to bounce higher.

1M/6M Trends: Bearish/Neutral

Relative Strength: 9/10

OptionsPlay Score: 98

Stop Loss: @ $1.60 Credit (50% loss of premium paid.)

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Monday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

We head into another start of earnings season with the banks reporting at the end of this week. As interest rates climb, banks potentially are primed to benefit from that as interest income rise. JPM has been best positioned for the past few years as best in breed and its recent selloff to its $144 support level provides an opportunity to buy just before earnings. I’m looking for a strong earnings to potentially propel JPM towards our $155 upside target. With options premiums on the expensive side, we have to use a debit spread structure to take advantage of earnings. I’m looking to buy the Nov $146/155 Call Vertical @ $3.16 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 6 Contracts for a risk of $1,896. We will set a stop loss on the put spread at around 50% of the premium paid @ $1.60 Credit.

JPM – Daily