Yesterday, we looked at a Daily Price Chart for General Mill Inc. noting that the stock has been recently making a series of 52-Week Highs.
For today’s Trade of the Day e-letter we will be looking at a daily price chart for J.P. Morgan Chase & Co. stock symbol: JPM.
Before breaking down JPM’s daily chart let’s first review what products and services the company offers.
JPMorgan Chase & Co. operates as a financial services company worldwide. It operates through four segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. The CCB segment offers s deposit, investment and lending products, payments, and services to consumers; lending, deposit, and cash management and payment solutions to small businesses; mortgage origination and servicing activities; residential mortgages and home equity loans; and credit card, auto loan, and leasing services.
Now, let’s begin to break down the Daily Price chart for JPM stock.
Below is a Daily Price chart with the 50-Day EMA and 100-Day EMA for JPM.
50-Day EMA and 100-Day EMA ‘Sell’ Signal
The 50-Day Exponential Moving Average (EMA) and 100-Day EMA are moving average indicator lines that can provide buy and sell signals when used together. When the shorter-term 50-Day EMA crosses above or below the longer-term 100-Day EMA, this provides either a buy or sell signal depending on which direction the stock price is moving.
- 50-Day EMA line Above 100-Day EMA = Price Uptrend = Buy signal
- 50 Day EMA line Below 100-Day EMA = Price Downtrend = Sell signal
When the 50-Day EMA (blue line) crosses above the 100-Day EMA (red line) this indicates that the stock’s buying pressure has begun to outweigh the selling pressure signaling a ‘buy’ signal. When the 50-Day EMA crosses below the 100-Day EMA this indicates that the selling pressure has begun to outweigh the buying pressure signaling a ‘sell’ signal.
Sell JPM Stock
As the chart shows, on January 24th, the JPM 50-Day EMA, crossed below the 100-Day EMA.
This crossover indicated the selling pressure for JPM stock exceeded the buying pressure. For this kind of crossover to occur, a stock has to be in a strong bearish trend.
Now, as you can see, the 50-Day EMA is still below the 100-Day EMA meaning the ‘sell’ signal is still in play.
As long as the 50-Day EMA remains below the 100-Day EMA, the stock is more likely to keep trading at new lows and bearish positions should be initiated.
Our initial price target for JPM stock is 99.35 per share.
Profit if JPM is Down, Up, or Flat
Now, since JPM’s 50-Day EMA is trading below the 100-Day EMA, the stock will likely continue its trend downward. Let’s use the Hughes Optioneering calculator to look at the potential returns for a JPM put option spread.
The Put Option Spread Calculator will calculate the profit/loss potential for a put option spread based on the price change of the underlying stock/ETF at option expiration in this example from a 7.5% decrease to a 7.5% increase in JPM stock at option expiration.
The goal of this example is to demonstrate the ‘built in’ profit potential for option spreads and the ability of spreads to profit if the underlying stock is down, up, or flat at option expiration. Out of fairness to our paid option service subscribers we don’t list the option strike prices used in the profit/loss calculation.
The prices and returns represented below were calculated based on the current stock and option pricing for JPM on 7/14/2022 before commissions.
Built in Profit Potential
For this option spread, the calculator analysis below reveals the cost of the spread is $318 (circled). The maximum risk for an option spread is the cost of the spread.
The analysis reveals that if JPM stock is flat or down at all at expiration the spread will realize a 57.2% return (circled).
And if JPM stock increases 7.5% at option expiration, the option spread would make a 21.6% return (circled).
Due to option pricing characteristics, this option spread has a ‘built in’ 57.2% profit potential when the trade was initiated*.
Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat.
A higher percentage of winning trades can give you the discipline needed to become a successful trader.
The Hughes Optioneering Team is here to help you identify winning trades just like this one.
Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade.
Trade High Priced Stocks for $350 With Less Risk
One of the big advantages to trading option spreads is that spreads allow you to trade high price stocks like Amazon, Google, Netflix or Apple for as little as $350. With an option spread you can control 100 shares of Google for $350. If you were to purchase 100 shares of Google at current prices it would cost about $220,000. With the stock purchase you are risking $220,000 but with a Google option spread that costs $350 your maximum risk is $350 so your dollar risk is lower with option spreads compared to stock purchases.
Hughes Optioneering Strategies Perform In All Markets
This isn’t Chuck’s first bear market…
Over the past 20+ years, Chuck’s strategies have proven to perform, even in the most volatile markets.
His strategies championed market corrections, the Dot-Com Crash, and the 2008 Great Recession**.
This is your chance to gain access to his proven strategies and start receiving hand-picked trades from 10-Time Trading Champion!
Just call Brad at 1-866-661-5664 or 1-310-647-5664 to join his Weekly Option Alert Trading Service and use the code “Optioneering VIP” to receive special pricing.
You can also CLICK HERE to schedule a call!
Wishing You the Best in Investing Success,
Editor, Trade of the Day
Have any questions? Email us at firstname.lastname@example.org
*Trading incurs risk and some people lose money trading.
** Trading incurs risk and you may lose money trading. Past performance does not necessarily predict future results. Member profits and losses are not tracked. Profit potential is taken from results of signaled trades, not actual member results. Not all members make the trades.
DISCLAIMER: The information provided by the Legacy Publishing LLC (“Legacy”) Trading Services, newsletters and educational publications (“Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by Legacy a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. Past performance is not necessarily indicative of future results. Please note that results may not be typical and can vary from person to person. There are inherent risks involved with investing in the stock and options market, including the loss of your investment. Any investment is at your own risk. You should only trade or invest your “risk capital” – money you can afford to lose. Trading stocks and stock options involves high risk, and you can lose the entire principal amount invested or more. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Chuck Hughes’ profit results are not typical. Chuck Hughes is an experienced investor, and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position, willingness to follow the rules and other factors. The actual profit results presented here may vary with the actual profit results presented in other Legacy publications due to the different strategies and time frames presented in other publications. Trading on margin carries a high level of risk and may not be suitable for all investors. Other than the refund policy detailed elsewhere, Legacy does not make any guarantee or other promise as to any results that may be obtained from using the Services. Open trade profit snapshots of Chuck Hughes’ trading accounts represent the open trade profit performance for the trade(s) or the portfolio displayed on the day the snapshot was taken. Open trade profits may have increased or decreased when trades were closed out. Other strategies may not have been profitable during the same time period the open trade profits were displayed. In order to avoid a conflict of interest, Trading Service recommendations were not executed by Chuck Hughes or his associates. The trade entry and exit prices (and resulting profit/loss) represent the price of the security at the time the recommendation was disseminated. Trading Service profits are not based on actual trades and have certain limitations. Because the Trading Service trades have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Also, the Trading Service results do not include the costs of subscriptions, commissions, or other fees. No representation is being made that you will achieve profits or the same results as any person providing a testimonial. Testimonials may relate to various other products offered by Legacy Publishing and not the product offered here, but all of these products are based on Chuck Hughes’ system. Performance results of other products described in such testimonials may be different from results for the product being offered and may have been achieved before the product being offered was developed. Results described in testimonials from other products or the product being offered may not be typical or representative of results achieved by other users of such products. No representation is being made that any of the persons who provide testimonials have continued to experience the same level of profitable trading after the date on which the testimonial was provided. In fact, such persons may have experienced losses thereafter or may have experienced losses preceding the period of time referenced in the testimonial. Cash Payout trades receive cash credits from the sale of option premiums. The net profits for Cash Payout trades may be less than the cash received for the sale of the option premium. Some cash income figures presented represent the total amount of option premium collected during the referenced period. Actual profits were less. Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by Legacy Publishing LLC. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, https://www.sec.gov/reportspubs/investor-publications/investorpubsautotradinghtm.html