JPMorgan, Bank of America Attract Millions of Dollars in Options Block Trades

$JPMorgan Chase(JPM)$   and $Bank of America(BAC)$   saw deep-pocketed investors and large speculators take millions of dollars in options position ahead of earnings. 

At 11:14:51 a.m. in New York Tuesday, an active seller collected a $1.21 million premium for writing put options that give the holder or holders the right to sell 150,000 JPMorgan shares at $230 by June 20. That bullish trade would be profitable for the seller should JPMorgan shares continue to trade above that level over the next 156 days, allowing the contracts he or she sold to expire worthless.  

The banking giant's shares climbed more than 70% over the past two years after earnings exceeded analysts' estimates for nine straight quarters. The stock traded at $245.04 at 1:09 p.m.

"Global investment-bank sentiment has been aided by reduced economic risk and recovering underwriting and advisory fees, with optimism for less regulation under a new Trump administration also bolstering US peers," Bloomberg Intelligence analysts Alison Williams and Ravi Chelluri wrote in a note Tuesday. "Full-year results and insight on the macroeconomic and policy outlook, as well as markets-related revenue momentum, are pivotal to support broadly higher valuations."

Bank of America saw a number of block trades Tuesday, the biggest of which involved an active buyer paying a $1.15 million premium for call options that give the holders the right to buy almost 1.5 million at $47 each shares by Feb. 7.

Shares of Bank of America rallied 42% to $45.70 over the 12 months, slightly ahead of the $KBW Nasdaq Bank Index (.BKX.US)$'s 40% gain as the bank consistently exceeded analysts' earnings estimates every quarter since June 2022. For the three months that ended in December, earnings are seen climbing to 77 cents a share, from 37 cents a year earlier, buoyed by rising net interest income (NII). 

"Loan demand is pivotal to help boost revenue in coming quarters, and the bank's 4% annualized pace may outperform the industry, based on management's December commentary, with commercial-line stabilization a positive sign and card seasonally strong," Chelluri said in a separate note Monday. 

Across global investment banks, the analysts said there's room for earnings estimate to move higher, as they expect trading to stay resilient, while banking, wealth and asset management fees continue add to the top line. JPMorgan top the list of banks that saw positive earnings revision recently.   

Over the past four weeks, the average earnings estimate for JPMorgan has risen by about 5% to $4.10 per share for the fourth quarter that ended in December, according to data compiled by Bloomberg. That compares with the $3.11 earnings per share that the company reported a year earlier. 

"JPMorgan's capital-markets revenue strength bodes well entering 2025, with core net interest income (NII) supported by higher rate expectations in recent months," Chelluri wrote in another note last week. "NII for 4Q and 2025 could be more resilient vs. consensus' decline, with capital markets revenue relatively robust and momentum into 1Q."

@TigerStars  @CaptainTiger  @Daily_Discussion  @TigerWire  @Tiger_chat  @Tiger_comments  @MillionaireTiger