4 Trades to Ride a Move Higher in JP Morgan: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Once again JP Morgan, $JPM, stock shows up as a bonus idea. This seems to amuse Jamie Dimon. But what has not amused him is the fact that his stock price remains stuck in a box. It got a boost after the election in November like all financial stocks, but then has stalled in a range between 82 and 94.50 since December. Since the beginning of June it has looked positive, bouncing off the bottom of the range and reaching the top to start July. It has held in a tighter range much closer to the top since then.

The Bollinger Bands® are tight and flat, and if it should break to the upside there is a Measured Move to about 109 to match the move into the box. The recent up leg would give a Measured Move to 102.50 along the way. The RSI is pulling back though it and nearly at the lower edge of the bullish zone, while the MACD is dropping and near zero. Momentum does not currently support a move up. There is no resistance above 94.50 and support sits below at 90.50 and 89 then 86 and 84.50 before 82. Short interest is low under 1%, and the company is not expected to report earnings again until October 12th.

The options chain for this week shows large put open interest at the 90 strike which could act as support, and spread on the call side from 91 to 95. September open interest ramps from 87.50 to a peak from 95 to 97.50 on the Call side with the biggest at 90 on the Put side but much smaller. In October, the first after the next earnings report, open interest is biggest by far at the 95 and 100 Call Strikes, with smaller size from 85 to 92.50 in the puts. All this suggests options traders expect a drift higher through to the next earnings report.

JP Morgan, Ticker: $JPM

Trade Idea 1: Buy the stock with a stop at 90.50.

Trade Idea 2: Buy the stock and add an October 90/85 Put Spread ($1.60) for protection. Sell the December 100 Calls (70 cents) to lower the cost.

Trade Idea 3: Buy the October 87.5/92.5 bullish Risk Reversal (20 cents) for a run higher into earnings.

Trade Idea 4: Buy the October 92.5/September 95 Call Diagonal ($1.65). Continue to sell shorter dated higher strike Calls as the September Calls expire.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with August options Expiration completed saw the equity Index ETF’s suffered some short term damage. Elsewhere look for Gold to continue in its uptrend with Crude Oil joining it moving higher. The US Dollar Index continues to move sideways in the downtrend while US Treasuries climb higher.

The Shanghai Composite looks to continue to drift higher as Emerging Markets consolidate in their uptrend. Volatility looks to remain closer to the normal range and off of the abnormal low levels of the spring and early summer. This removes any support for equities in the short run. The equity index ETF’s SPY, IWM and QQQ, all continue to show weakness in the short term but with all at support levels and printing possible reversal candles. Longer term their uptrends remain intact. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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