The stock market tries to recover from a correction phase, which began in early February. We had two strong pull back, and it’s the first week, when stock prices are really a progressive movement upwards. The reason for this new optimism is that the inflammatory headlines ebbing.
So now we can focus on the actual fundamentals from the reporting season. The first face-off of banking shares and the Houston JPMorgan chase & co. (Ticker NYSE:jpm) kicked him out on a good note this morning. Management delivered a solid quarter. They exceeded expectations and showed wall Street why they are the cream of the crop.
There is room for improvement, but nothing to cause trade disappointment. Among the three banks, said today, I use NDM for wells Fargo and company (Ticker NYSE:WFC) or Citigroup Inc. (INDEXWITH).
Fundamentally, shares of jpm are not the cheapest of the banks, but in absolute terms is still profitable. It sells at an 18 price-earnings ratio and 1.5 times half the book. This reasonable evaluation provides a good base for rental prices in the future. This is my thesis.
In today’s trading I’m sure that the recent support, which was tested in February this adjustment will hold in 2018, and that prices will be higher in the future. So I take advantage of the increased level of risks that are put at a risk. The advantages of high cboe volatility Index (or VIX) that I can create an income from what others fear.
I also buy hopium up to capture profits from higher prices to come. I believe that this is a fundamental trade within the conservative portfolio. If the price goes against me, the worst thing that could happen is that I own Morgan shares at a discount of 18% from the current price. This worst-case scenario, which I accept, as I believe I can manage your profits in the long run.
Click to enlarge technically, jpm stock fared much better than the stock market as a whole, thereby strengthening what is the quality of the composition. Jpm is up 5% Year-to-date, while the financial select sector DWCPS Fund (NYSEARCA:xlf) is flat.
Prices of jpm and created a support group below $108 a share, and it supports against which I can argue. For additional warranty, there is another area of strong support just under $100 per share. So today’s trade is twofold.
The first will generate income from the said support. The second bet on the growth potential of incremental profit.
Shares of jpm trading ideas
Bank: sell the September$92.50 naked put and collect $1.60 to open. Now I have 85% of the theoretical chance that I would have to preserve the gains. But if the price falls below my opponent, then I get losses below $90.90. Those who want to reduce risk can sell $95/92.A$50 bull put spread is.
This growth potential: buy PDM may 25 $116/$118 a debit call spread, where you can double your money if the price rises through my punches.
The net effect of both transactions is the net credit, so I’m already a winner. While jpm and remains above my sold adds some bonuses I can recover from selling the debit call spread will be net profit.
Get my free newsletter and subscribe to my YouTube channel. Nicolas Chahine-managing Director SellSpreads.com. At the time of this writing, he has not held positions in any of the above securities. You can follow him as @racernic on Twitter and stocktwits.