Hedge Your JPMorgan Position With Options

| About: JPMorgan Chase (JPM)

JPMorgan Chase & Co (NYSE:JPM) is scheduled to release last fiscal quarter's results before the opening bell on April 13, 2012. Let's take a look at how JPMorgan Chase & Co has done in recent quarters.

Who They Are:

JPMorgan Chase & Co., a financial holding company, provides various financial services worldwide. The company was founded in 1823 and is headquartered in New York. JPMorgan Chase & Co trades an average of 37.8 million shares per day and has a market cap of $169.3 billion.

Book Value: $48.66
Float Short: 0.86%

What To Expect:

On average, 23 analysts are expecting a drop of $-0.05 in earnings per share compared to last quarter's results of $0.01. Wall Street is expecting $-0.04 per share based on earnings estimates.

Recent Stock and Valuation Performance:

The current trailing twelve months P/E ratio is 9.9.

The forward P/E ratio is 9.23. In the last month, the stock has increased in price 8.26%, and -6.30% from one year ago.

It is clear to see the stock is performing much better than the overall market with a relative double digit gain.

When comparing to the S&P 500, the year to date difference is 20.10%.

The bottom line has rising earnings year-over-year of $18.98 billion for 2011 vs. $ 17.37 billion for 2010.

The short interest is relatively low at 0.86%.

Here are the last few quarters to get an idea how well the company performs compared to estimates:

(Click to enlarge)paid2trade.com

Reported earnings per share compared to the mean estimate. Differences are rounded.

I like the April monthly $43 strike price call as a hedge into earnings. The premium is high and will fall after earnings are released. The premium is about $1.15 bringing a purchase cost basis down to under $41.90. If JPM moves higher you get to ride some of the gains and if not you will make money with the covered call even if JPM stays the same and has a lackluster earnings release.

Paid2Trade uses information believed to be correct, but is not guaranteed and is not independently checked for accuracy You may wish to use this article as a starting point of your own research with your financial planner.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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