Kevin Kelly's JPMorgan Options Trade

Kevin Kelly of Recon Capital Advisors spoke on Bloomberg Markets about an options trading strategy in JPMorgan Chase & Co. JPM.

He is bullish on the financial sector because he expects to see deregulation in the U.S. and he also expects the net interest margin to increase and corporate tax rate to decrease. Kelly thinks that JPMorgan might guide its dividend higher and he finds its price-to-earnings ratio attractive. He wants to initiate a long position in the name with a risk reversal options strategy.

Kelly wants to sell the April 80 put and buy the April 87.5 call and the whole structure would cost him $1.65. The trade breaks even at $89.15 or 3.15 percent higher at the April expiration. If JPMorgan trades below $80, Kelly is going to have to buy the stock.