Several JP Morgan (JPM, news, chart) options contracts saw substantial increases in open interest (OI) after the latest trading session. OI in the JPM Jan 50 calls increased 27,409 to 104,300, the Jan 35 puts by 27,198 to 96,114 and the Jan 20 puts by 25,360 to 82,668. A lot of this activity was tied to some spread trading. Several times throughout Monday’s trading session, a player was seen buying the January 35 and 20 put spread and also selling the same number of Jan. 50 calls. For example, at approximately 13:30, the customer bought 10,000 of the spread and sold 10,000 calls for a net debit of $1.75.
The positioning seems bearish and possibly a bet on a significant move lower in JPM during the rest of the year. If so, the spread can widen and the calls, which are already deep out of the money, lose value over time. JPM settled Monday’s trading session at $37.66.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.