If you thought JPMorgan and agriculture prices have little in common, you’d probably be right. But they do share one characteristic — they are both headed lower, if the traders on Friday’s " Options Action " are correct.
Let’s start with the bearish call on the beleaguered bank. The “London Whale” loss has already caused plenty of trouble for JPMorgan stock — it’s down 25 percent from its March high. But RiskReversal.com’s Enis Taner thinks the loss will cause more problems than have already been priced in. In his view, the loss will lead to greater regulatory scrutiny, and will ultimately cause more damage to the bank’s earnings than investors expect.
So as a bearish play, Enis sold the 35/37 call spread — see his trade and breakdown below.
ENIS’S JPMORGAN TRADE
• SELL THE AUGUST 35-STRIKE CALL FOR $1.15• BUY THE AUGUST 37-STRIKE CALL FOR $0.50
HOW ENIS’S JPMORGAN TRADE MAKES MONEY
• PROFITS BELOW $35.65• LOSSES BETWEEN $35.65 AND $37.00• LOSSES CAPPED AT $37.00Page 1 of 3 | Next Page