- JPMorgan Chase (JPM) stock has broken above 200, clearing a flat base with a 200.94 buy point.
- A bull call spread might be a good strategy in the current market, offering bullish exposure with limited risk.
- Traders can create a bull call spread by buying a call and selling a further out-of-the-money call, limiting both cost and upside.
Explore the recent performance of JPMorgan stock and learn how to leverage a bull call spread strategy for potential profit.
JPMorgan Stock Breaks Above 200
JPMorgan Chase (JPM) stock has recently broken above 200, clearing a flat base with a 200.94 buy point. This bullish move presents potential opportunities for traders, particularly those interested in utilizing a bull call spread strategy.
Understanding the Bull Call Spread Strategy
A bull call spread strategy involves buying a call and then selling a further out-of-the-money call. This approach reduces the cost of the trade but also limits the upside. For instance, as of late Tuesday, a 200-strike call option for August expiration was trading around $9.70, while the 210 call was around $5.
Max Profit On JPMorgan Stock Trade: $530
By buying the 200 call and selling the 210 call, traders can create a bull call spread. The cost of this trade would be $470, calculated as the difference in the option prices multiplied by 100. The maximum potential profit would be $530, calculated as the difference in strike prices, multiplied by 100 less the premium paid. This strategy is risk-defined, meaning the most the trade could lose is the roughly $470 premium paid if JPMorgan stock closes below 200 on Aug. 16. Potential gains are also capped above 210.
Earnings Risk For JPMorgan Stock Trade
It’s important to note that JPMorgan Chase is due to report earnings in early July. This means that this trade would carry earnings risk if held until then. As with all investments, options are risky, and investors can lose 100% of their investment. Therefore, it’s crucial to do your own due diligence and consult with a financial advisor before making any investment decisions.
Conclusion
JPMorgan’s recent stock performance presents potential opportunities for traders, particularly those considering a bull call spread strategy. However, it’s important to understand the risks involved, particularly with the upcoming earnings report. As always, sound investment decisions should be based on thorough research and professional advice.
