JPMorgan: Options Investors Cashing In
I am not an overly superstitious person, but when an omen presents itself, I pay attention.
At 9:30 this morning, the New York Stock Exchange was supposed to ring its opening bell, just as it does at the beginning of every trading day. Today, however, the bell refused to work. No matter how hard the button was pressed, the bell would not sound. It marked the start of a very bad morning on Wall Street.
Congress is working to pass a $700 billion piece of legislation designed to pull the world’s economy out of the gutter, yet investors are not buying. It is a slap in Washington’s face, showing most folks do not believe the emergency measures are going to be strong enough to pull us out of this mess.
The equities markets are plunging, the credit markets are locked, and banks are dropping one after another. The situation is not pretty, but it is most certainly creating profit opportunities.
JPMorgan (NYSE:JPM) is one of the few remaining banks with any shot of success. When it announced on Friday that it was buying the retail-banking assets of Washington Mutual (WM), it caught the Street’s attention. I recommended that readers buy the company’s December 45 Calls [JPMLI.X].
It was a good call, as share price soared throughout the day and the price of the options went exponentially higher. With the Dow down by more than 300 points at times this morning and the European banking industry showing signs of cracking, it is no surprise JPMorgan’s share price has taken a hit.
Even so, the call options remain well into positive territory. If you followed my advice and bought the options, unload them now and lock in your profits. You should be able to sell for gains of over 35%. Not bad in just over a day.
There will be more and more profit opportunities as this situation works itself out. Keep an eye on the headlines, find the undervalued plays and invest accordingly. As long as there is movement, there is profit opportunity. The bigger the swings, the bigger the gains.
Disclosure: none
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This article has 1 comment:
- PrudentMan, CFA
- 93 Comments
Sep 29 12:13 PMThey are getting what many uninformed call "too big to fail" which means too big. And, too big means they will certainly fail. This band aid may work for a while but this is a recipe for financial disaster not a solution.
Welcome to Government Capitalism and the end of Free Enterprise.
I have never been so pessimistic since it looked like Jimmy Carter may be reelected. Hopefully another Reagan may come along but certainly Obama isn't even in the same planet but he has the One World Government supporters in his corner and they are getting their way now.