A Pair Trade Opportunity By JPMorgan's Preferred Stocks

(10min)

Summary

  • Market volatility due to US tariffs and recession fears has created an opportunity for pair trades in JPMorgan's preferred stocks, specifically JPM-L and JPM-D.
  • JPMorgan's financials show concerning cash flow from operations, with a significant negative value reported for Q1 2025, raising sustainability questions.
  • The pair trade between JPM-L and JPM-D offers a potential 6% profit due to the temporary equalization of their call option prices.
  • Investors should use discretion to exploit this opportunity, considering the carry costs and liquidity of these preferred stocks.
  • This idea was discussed in more depth with members of my private investing community, Trade With Beta. Learn More »

Skyscraper building of JP Morgan in Hong Kong

danielvfung

Co-authored by Relative Value.

Overview

The announcement of US tariffs in early April 2025 and increased fears of recession triggered a sell-off across most market sectors and product types. The increased volume on the selling side affected common equity

Trade With Beta

At Trade With Beta,

we discuss ideas like this as they happen in more detail. All active investors are welcome to join on a free trial and ask any question in our chat room full of sophisticated traders and investors.

This article was written by

14.57K Followers

Arbitrage Trader, aka Denislav Iliev has been day trading for 15+ years and leads a team of 40 analysts. They identify mispriced investments in fixed-income and closed-end funds based on simple-to-understand financial logic.

Denislav leads the investing group Trade With Beta, features of the service include: frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of 1200+ equities, IPO previews, hedging strategies, an actively managed portfolio, and chat for discussion. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of JPM.PR.L either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Short JPM-D

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About JPM Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on JPM

Related Stocks

SymbolLast Price% Chg
JPM
--
JPM.PR.D
--
JPM.PR.L
--