JPMorgan Chase is launching a free trading app next week
The shares of online brokers are taking a hit today, on news JPMorgan Chase (JPM) will launch a free trading app next week called You Invest. Among the financial stocks trading lower are E*TRADE Financial Corp (NASDAQ:ETFC) and Charles Schwab Corporation (NYSE:SCHW) -- sending options traders into overdrive.
E*TRADE Financial Stock Call Options Pop
E*TRADE Financial shares are down 2.4% at $59.75 -- on track to close below long-term support at their 120-day moving average for the first time since June 2017. Nevertheless, the stock appears to be finding a foothold near the $58-$59 region, which roughly coincides with ETFC's 20% year-to-date return.
In the options pits, 6,424 calls and 2,709 puts have traded on ETFC stock so far -- almost four times what's typically seen at this point in the day. It looks like one trader may be initiating a long call spread at the October 65 and 75 strikes for a $0.80 per pair of contracts. If this is the case, the goal is for the equity to rally north of $65 by October options expiration, with the trader lowering their cost of entry -- and limiting their potential reward -- with the short 75 call.
Charles Schwab Stock Targeted for September Short Strangle
Charles Schwab stock is trading 1.5% lower at $50.65, and has now shed almost 16% from its late-May record high of $60.22. The shares are now trading below their year-to-date breakeven level near $51.50, which has recently emerged as resistance.
SCHW options volume is crossing at six times the expected intraday rate, with 18,207 calls and 12,847 puts on the tape at last check -- in the 100th annual percentile. One speculator appears to be anticipating muted price action in the near term, possibly initiating a short strangle with the September 48.50 put and 50.50 call for a net credit of $1.90 per pair of contracts. If this is the case, the goal is for Charles Schwab stock to finish between the two breakeven points of $46.60 (put strike minus net credit) and $52.40 (call strike plus net credit).