For consecutive months, J.P. Morgan Chase posted solid gains and the stock price gained 20% in June and July. What happened next was not necessarily a market correction, but the result of declining consumer confidence as the bank was mired in a string of scandals. The question that binary options traders should be asking right now is whether they should take their chances and back JPM or wait until the end of the year and see how these scandals will affect the bank.
A Hidden Opportunity to Invest
Savvy binary options traders and stockholders alike see opportunities where others only see obstacles and this is exactly what we have right now with J.P. Morgan Chase. The London Whale scandal set them back $6.2 billion and more importantly damaged the bank's reputation and this is only the tip of the iceberg, with plenty of minor scandals hurting the image. Some of them have been settled, others are still brewing and there is a lot of uncertainty surrounding J.P. Morgan Chase, which explains why the number of bears has increased sharply.
The next scandal could cost the bank $11 billion after an outrage related to inferior mortgage securities has resurfaced. All these reasons should suggest that this bank is too hot to be handled and its stock's price would go downwards in the next couple of months. Despite the scandals engulfing them, J.P. Morgan Chase still generates a lot of profit and investors are more concerned about the cold numbers than the bank's image. The fact that their stock is still underpriced at least as far as mega caps are concerned, is a stronger incentive to buy JPM than the scandals are a deterrent.
A Slight Edge over the Competition
J.P. Morgan Chase competitors are definitely cheering at their recent struggles and legal issues, but in the market they failed to capitalize on this unexpected advantage. In fact, JPM proved to be more effective in addressing the numerous changes that the banking industry is undergoing and recorded better revenue than these rivals. They make a healthy $14 billion per year in interest income, remarkable numbers given the unfavorable interest rate environment of today.
Binary options traders couldn't care less about the dividends offered by J.P. Morgan, at least not directly but these numbers have a direct impact on the stock price. The bank offers dividends on par or slightly higher than its main competitors but the most important thing is that unlike some of these rivals, they can sustain this rate. Two months ago JPM stock traded at $56 per share but the price sank to $52, so binary options traders should contemplate a return to the high values of early August.