Until my recent conversation with Jason the other day, I will admit that JPM was not on my radar. I have actually steered clear of the financials for some time. But I have today made a play on JPM. I sold 10 put contracts at the $30 strike for $.36 with Jun 09 expiry. Looking at the chart JPM has put in support at the $34 level with the next level at $32. I will re-evaluate this position if it breaches $33. But with 17 days until experation I feel confident with this play.
Update: So As the day progressed today JPM entered into a intraday downtrend around 12:00 Eastern time on the chart. But take note of the light volume, and it was not until the 20 minutes into the last hour of trading that it breached support at the $34 level to trade all the way down to $33.65. The second half hour of trading was more important, as you look at the chart towards the end of the day, take note of the increase in volume to bring JPM back to its $34 support level. Lastly and I think this is important look at the last volume bar where JPM traded almost 3MM shares around $34, so there are obvious buyers at this level.
I think their secondary offering earlier in the week was at about $34, so that usually stands as an area of at least temporary suppost given that they had zero difficulty raising $5 billion at that price level just a few days ago. We'll see what happens. To be honest, if the $30 were to be breached, that means volatility would have to be up. Baring new information that might caused that breach, I would just be inclined to take possession and write a rich premium covered call and start fighting my way back. Or even trade out, take the loss on the $30 puts and then turn around and sell $25's or so. We'll see. I'm not scared of this position should it move against me. Thanks for the chart post, it does tell a story.
ReplyDeleteToday I bought back my 10 Naked $30 puts for $.09 and captured 75% of the time value that I sold. I continue to hold my Jan 10 Naked puts. When I first put on this trade 34 was support and I looked for JPM to trade back to its secondary offering price of $35.25 and hold. It held for a few days and then today it broke. So I decided to take some profits and some risk off the table. It was just a gut feeling.
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