Wall Street perceives JPMorgan Chase & Co. (NYSE:JPM) as a premier bank in its class, so there is no need to argue for its particular fundamentals. They are proven performers beyond reproach.
![Profit From JPMorgan Chase & Co. (JPM) Stock No Matter What](https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif)
The financial sector benefited from Trump’s election, as he promised (and is delivering) on unshackling them from red tape. So investors flocked into banks in anticipation of better P&Ls from lower expenses.
Furthermore, the outlook of financials is also made rosier by the prospects of higher rates. The U.S. Federal Reserve is in the middle of a rate hike cycle and the perception is that banks will subsequently profit. Whether it’s true is almost immaterial, as perception is what drive stock prices.
And that’s how I trade memes like the financial consensus at hand. I sell risk against proven support levels where buyers or sellers would step in, then I let time do the work. Case in point, on March 21 I shared a bullish JPM trade that yielded easy profits without the need to have a perfect entry or exit points.
Sure having solid fundamentals matters, but using options eliminates the need to be surgical with my trade entries.
Click to Enlarge I can’t tell you where JPM will close in the next few months, but I am confident that buyers will step in if JPM stock falls 20% or more.
So the trick is to find likely support levels and using time I can find trades with 90% certainty of success.
The Trade: Sell JPM Sept $72.50 naked put and collect 70 cents per contract. This is a bullish trade that comes with 95% certainty that the premium will expire worthless in my favor.
I chose $72.5 because that would even account for half of the potential weak hands who chased the rally in November 2016. But if I am not willing to own JP Morgan Chase shares at $72.50 then I would change this trade to be a credit put spread instead.
The Alternate: Sell the JPM Sept $75/$72.50 credit put spread. This trade has a slightly smaller price buffer, but still yields 9% on money risked. The beauty of selling downside risk is that I don’t need JPM to rally. I profit as long as price stays above my sold risk.
Email sellspreads@gmail.com with questions or join me to learn more about options in a personal 1on1 webinar here. Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @racernic and stocktwits at @racernic.