Investors should snatch up JPMorgan 's January call options heading into the bank's earnings report, according to Goldman Sachs. A call option gives investors the opportunity to buy an asset at a specific price — known as a strike price — at a certain date. A call option is "in the money" if the share price exceeds the strike price. In this case, Goldman thinks investors can make money if they purchase the $172.50 JPMorgan calls, expiring Jan. 24. JPMorgan is slated to report its fourth-quarter results Friday morning. Options trading activity suggests the stock could swing by 3%, which is in line with its average earnings move over the past eight quarters. Goldman analyst Richard Ramsden anticipates JPMorgan will beat consensus estimates on pre-provision net revenue, which is the sum of net interest and noninterest income with noninterest expenses subtracted. His optimism for outperformance on the measure stems from expectations for higher net interest income and lower core expenses. JPM 1Y mountain JPMorgan over the last year Ramsden is also heartened by the bank's franchise value and upside to "best-in-class" revenue as a result of improvements in market share. That development comes even as the broader industry grapples with deposit pricing challenges, weak loan growth and credit normalization. JPMorgan also retained many high-value, noninterest bearing deposits during broader industry outflows toward money market funds in 2023, he said. Given this backdrop, Ramsden thinks JPMorgan will also beat consensus expectations for net interest income by 1%, while core expenses should be 16% lower than the Street forecasts. The analyst also anticipates the bank can increase buybacks earlier than previously anticipated. Elsewhere, he said an eventual recovery in the investment banking business this year can offset lower trading fees. JPMorgan shares have slipped 0.4% since the start of 2024, giving up some gains after climbing nearly 27% in the prior year.
