From JPMorgan To Johnson & Johnson, Options Activity Surrounds This Week's Earnings

On Monday, Benzinga spoke with TD Ameritrade’s Chief Strategist JJ Kinahan about options activity in a few stocks ahead of earnings.

The Financial World

The expert told Benzinga that JPMorgan Chase & Co. JPM has a 2 percent expected move at the time. The company saw a lot of call buyers last week; on Friday, the calls-to-puts relation was 3 to 1. Kinahan assured that calls were particularly popular in the $70 line in both July and August.

Regarding Wells Fargo & Co WFC, the analyst said he also sees the stock moving about 2 percent (or slightly less). Even though the stock has been rallying recently, there are “a lot of buyers on the July $55 put line over the last week or so,” he added.

Doing some quick math, Bank of America Corp BAC, which is down almost 5 percent year-to-date, should move about 2.5 percent, Kinahan told Benzinga. Last week, the company saw a lot of buyers on the $17 July call line, he continued, adding that options activity at Bank of America was very similar to JPMorgan’s.

Among these three stocks, however, Kinahan declared he’d pay the most attention to Wells Fargo, especially when it comes to housing, “because they seem to have the biggest exposure.”

Other Stocks

Just like JPMorgan and Wells Fargo, Yum! Brands, Inc. YUM and Johnson & Johnson JNJ are reporting earnings on Tuesday.

Speaking to Benzinga, Kinahan said Yum! could expect a move of 5 percent or more. “The shares are up 25 percent this year, so, from the options statistics point of view, their implied volatility right now is a 100 percent higher,” he explained.

Finally, regarding Johnson & Johnson, the expert said he expects a 1.5 percent move. Although there is “a ton of options trading there,” there is nothing very interesting about volatility levels, he added.