DailyPlay – Opening Trade (JPM) – April 16, 2025

JPM Bearish Opening Trade Signal

Investment Rationale

We maintain a cautious outlook on JPMorgan Chase (JPM), driven by technical weakness, elevated valuation metrics, and a more guarded macroeconomic tone from management. Despite strong gains over the past year and solid Q4 earnings, CEO Jamie Dimon’s forward-looking commentary has turned conservative, highlighting risks from trade policy, inflation, and geopolitical tensions. Consumer sentiment in early 2025 has dropped to multi-year lows, discretionary spending is softening, and rising inflation expectations signal a cautious outlook. Recent earnings from Albertsons Companies highlight weakened consumer sentiment due to tariff-driven inflationary pressures, with customers prioritizing value-driven purchases. Similarly, United Airlines reported a decline in domestic coach sales, reflecting reduced discretionary spending amid economic concerns, further reinforcing the cautious economic environment.

JPM recently broke below its multi-month trading range before rebounding to test resistance around $235–$240. The broader trend has shifted to lower highs and lower lows, with a potential head-and-shoulders pattern forming on the daily chart. Momentum indicators like MACD remain bearish, and relative strength versus the S&P 500 is weakening. This bounce into resistance provides a defined-risk entry for bearish positioning, with a downside target near the $205 support area.

Despite its scale and profitability, JPM appears overvalued compared to industry peers, with forward growth expectations insufficient to justify its premium valuation.

• Forward PE Ratio: 13.0x vs. Industry Median 10.1x
• Expected EPS Growth: 5.14% vs. Industry Median 8.71%
• Expected Revenue Growth: 3.43% vs. Industry Median 3.76%
• Net Margins: 34.51% vs. Industry Median 24.93%

To express a bearish view, consider selling the JPM May 30, 2025, $235/$250 call vertical spread. This strategy profits if JPM stays below $235 through expiration, aligning with the view that the recent rally is unlikely to break out further amid valuation and macroeconomic headwinds.

JPM – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 2 Contracts JPM May 30 $235/$250 Call Vertical Spreads @ $5.88 Credit per Contract.

Total Risk: This trade has a max risk of $1,824 (2 Contracts x $912) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $912 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to respect resistance and continue lower over the duration of this trade.

1M/6M Trends: Bearish/Mildly Bearish

Relative Strength: 9/10

OptionsPlay Score: 104

Stop Loss: @ $11.76 (100% loss to value of premium)

View JPM Trade

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 Tuesday’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. 

View JPM Trade