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How one large bull is playing JP Morgan

David Russell (david.russell@optionmonster.com)

One investor is sticking with JP Morgan as the financial behemoth lumbers higher.

optionMONSTER's Heat Seeker monitoring program detected a surge of call volume in the bank, whose shares have risen 25 percent since the beginning of June. Today's activity appears to be an adjustment of a winning position as a trader looks for gains to continue through early next year.

A block of 15,000 January 41 calls was sold for $2.44 in volume that was below open interest at the beginning of the day. At the same time, 15,000 January 43 calls were bought for $1.49 and 15,000 January 46 calls for $0.61. Rounding out the activity, 7,500 November 46 calls were sold for $0.17.

The investor apparently owned the January 41s and closed that position to buy the January 43s and January 46s, thereby increasing leverage to the upside before the company's quarter earnings report on Friday morning. The trader also sold the November contracts to offset some of the cost, resulting in a net credit of about $637,000.

JPM is down 0.58 percent to $41.47 today and has been consolidating in its current range since mid-September. Financials have been one of the strongest sectors in the last three months, and analysts expect more strength from the banks as earnings season gets underway.

Calls outnumber puts by JPM by a bullish 4-to-1 ratio, according to the Heat Seeker.

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