IB Options Brief: JPMorgan Chase & Co. (JPM) & Goldman Sachs Group, Inc. (GS)

Posted December 2nd, 2011 by Caitlin Duffy in Unusual Activity

Bulls Feed On Large-Cap Financials Weekly Call Options

JPM ñ JPMorgan Chase & Co.
Financial names are on a tear today, and some options strategists are positioning for the good times to continue in the near term. Weekly call options on some of the large-cap financials are flying off the shelves this afternoon, as traders look to take advantage of the rally while it lasts. Shares in JPMorgan are soaring 8.2% to stand at $32.96, making the stock the best performer of the 15-largest holdings in the XLF, as of 12:30 PM in New York. Investors prepared to benefit from continued gains in the price of the underlying purchased in- and out-of-the-money call options with one week remaining to expiration. Bulls picked up roughly 1,800 in-the-money calls at the Dec. í09 $32 strike for an average premium of $1.06 each, and bought another 3,000 calls at the higher $33 strike at an average premium of $0.39 apiece. Call buyers may profit at expiration next week in the event that shares in JPMorgan Chase & Co. exceed the average breakeven prices of $33.06 and $33.39, respectively.

GS ñ Goldman Sachs Group, Inc.
Similar to that observed on JPM, near-term bullish activity in Goldmanís weekly calls indicates traders are willing to shell out premium today to speculate on continued recovery in the price of the financial institutionís shares over the next five trading sessions. Goldmanís shares are up 5.6% at $99.75 in early-afternoon trade. Options players exchanged more than 5,900 calls at the Dec. í09 $105 strike against open interest of 187 contracts, and appear to have purchased the majority of the contracts for an average premium of $1.05 a-pop. Investors long the call options may profit at expiration next week in the event that shares in Goldman Sachs surge 6.3% to surpass the average breakeven point on the upside at $106.05. Finally, bullish sentiment spread to the higher $110 weekly call where traders paid an average premium of $0.30 to buy some 630 contracts.

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