JPM: Stock Roaring to New Highs!

Dear Reader,

Yesterday, we looked at a Daily Price Chart of The Travelers Companies Inc., noting that TRV’s 50-Day EMA is trading above the 100-Day EMA signaling a ‘Buy’.

For today’s Trade of the Day we will be looking at a Daily Price chart for J.P. Morgan Chase & Co. stock symbol: JPM.

Before breaking down JPM’s daily price chart let’s first review which products and services are offered by the company.

J.P. Morgan Chase & Co. is one of the largest financial service firms in the world. J.P. Morgan organizes its business through five reportable segments: Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, Asset & Wealth Management, & Corporate.

Now, let’s begin to break down the Daily Price chart for JPM. Below is a Daily Price Chart with the price line displayed by an OHLC bar.

Buy JPM Stock

The Daily Price chart above shows that JPM stock has been hitting new 52-Week Highs regularly since mid-February.

Simply put, a stock does not just continually hit a series of new 52-Week Highs unless it is in a very strong bullish trend.

The Hughes Optioneering team looks for stocks that are making a series of 52-Week Highs as this is a good indicator that the stock is in a powerful uptrend.

You see, after a stock makes a series of two or more 52-Week Highs, the stock typically continues its price uptrend and should be purchased.

Our initial price target for JPM stock is 196.50 per share.

111.7% Profit Potential for JPM Option

Now, since JPM is currently making a series of new 52-Week Highs this means the stock’s bullish rally will likely continue. Let’s use the Hughes Optioneering calculator to look at the potential returns for a JPM call option purchase.

The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat JPM price to a 12.5% increase.

The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following JPM option example, we used the 1% Rule to select the JPM option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation.

Trade with Higher Accuracy

When you use the 1% Rule to select a JPM in-the-money option strike price, JPM stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if JPM stock is flat at 191.38 at option expiration, it will only result in a 2.4% loss for the JPM option compared to a 100% loss for an at-the-money or out-of-the-money call option.

Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options.

The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks.

The prices and returns represented below were calculated based on the current stock and option pricing for JPM on 3/13/2024 before commissions.

When you purchase a call option, there is no limit on the profit potential of the call if the underlying stock continues to move up in price.

For this specific call option, the calculator analysis below reveals if JPM stock increases 5.0% at option expiration to 200.95 (circled), the call option would make 54.6% before commission.

If JPM stock increases 10.0% at option expiration to 210.52 (circled), the call option would make 111.7% before commission and outperform the stock return more than 11 to 1*.

The leverage provided by call options allows you to maximize potential returns on bullish stocks.

The Hughes Optioneering Team is here to help you identify profit opportunities just like this one.

Interested in accessing the Optioneering Calculators? Join Chuck’s Wealth Creation Alliance 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.

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Wishing You the Best in Investing Success,