Known as one of the highest-quality banking stocks out there, JPMorgan Chase & Co. (JPM) in the financial space has succumbed to the market’s recent selling pressure. But for options traders, calls or bull call spreads could be one way to speculate on technical support holding, notes Bret Kenwell, US investment analyst at eToro.
JPM shares have fallen nearly 20% from their record highs in mid-February, tumbling to a key level on the charts. That’s as JPM tests down into its 200-day moving average and a prior breakout level.
Chart as of the close on 3/11/2025. Source: eToro ProCharts, courtesy of TradingView
JPMorgan fell hard into what could be a key technical area. If support holds up near $225, then we could see a larger bounce to the upside. On the flip side, support failing could lead to more volatility and selling pressure in the short term.
Shares of JPM trade at roughly 12.5 times forward earnings, well below the S&P 500’s valuation of about 20 times earnings and slightly above its long-term average of about 11.5 times earnings. However, analysts expect roughly flat earnings growth this year. That may be a turn-off for some investors even if JPM is considered a high-quality company.
If support holds, options buyers limit their risk to the price paid for the calls or call spreads, while trying to capitalize on a bounce in the stock. Conversely, investors who expect support to fail could speculate with puts or put spreads.
