JPMorgan Chase (JPM) shares climbed 4.2% on Wednesday, closing above their 50-day moving average in a strong bullish session. Against that backdrop, one options strategy centers on the stock holding above $330 in the coming weeks: a December put spread that could collect about $80 in premium, while carrying a maximum estimated loss of roughly $420.
December 18 $330/$325 put spread
The trade involves selling a December 18 put with a $330 strike and buying a put with the same expiration and a $325 strike. At the quoted spread price of about $0.80, the position would bring in approximately $80 per contract. The setup is designed for a stock that trades sideways or rises. A modest decline could still produce a different outcome from a sharper drop, depending on where JPM shares stand at expiration.
The spread has defined risk. The $5 gap between the strikes represents a maximum value of $500 per contract, based on 100 shares. After subtracting the roughly $80 premium received, the estimated maximum loss is about $420.
If JPM closes above $330 at expiration, both puts could expire worthless and the trader would keep the premium. The article’s estimate puts that at slightly more than a 19% return over about a month, assuming the trade is opened at the stated price and the stock finishes above $330. That estimate is not a guaranteed outcome.
Losses can reach about $420 below $325
If JPM finishes below $330, the short put may generate a loss. The $325 put limits the exposure to a further decline: at or below $325 at expiration, the spread reaches its maximum value and the estimated loss is about $420, using the quoted premium. The actual result depends on the execution price and the stock’s closing price at expiration.
The strategy follows Wednesday’s gain and JPMorgan’s move back above its 50-day average. Its central assumption is that the shares hold around $330 over the next few weeks; it is not a definitive view on JPMorgan or bank stocks. Although the spread sets a maximum risk, both the premium and the estimated loss depend on the quoted price, market movements and trade execution.