Bears are broadly in control of JPMorgan (JPM) stock heading into the bank’s Q3 earnings on Oct. 13 (before market opens), but the derivatives market believes the dynamic will shift after the print.
Consensus is for JPM to record $5.94 a share of earnings (EPS) for its third quarter on $51.2 billion in revenue, which would represent a 17% and 8.7% year-on-year increase, respectively.
Heading into the quarterly release, JPMorgan stock is up some 2% versus the start of this year.
What suggests bears are dominant in JPMorgan stock?
From a technical perspective, bears seem to be exerting their dominance on JPM shares given they have fairly recently slipped below their major moving averages (20-, 50-, and 100-day).
Plus, the stock’s relative strength index (RSI) sits in the early 40s, indicating there isn’t significant buying pressure that could help it reclaim those MAs in the near term.
In fact, even the 200-day MA currently sits near $323, signaling a percentage decline of a few more points could break the longer-term uptrend as well.
That said, options traders believe the opposite is about to happen after JPMorgan reports earnings tomorrow, which makes the bank stock attractive to own – especially since it pays a healthy 1.97% dividend yield as well.
Options sentiment remains bullish for JPM shares
According to data from Barchart, the options market sentiment remains constructive for JPMorgan shares heading into the earnings event.
The put-to-call ratio on contracts expiring Oct. 23 sits at 0.51 as of writing, indicating a reasonably strong bullish skew (a reading below 1.00 is typically characterized as in favour of the buyers).
More importantly, the upper price on those contracts currently sits just above $346, indicating JPM could rally over 3.5% on the back of its Q3 results in the near term.
Note that Wall Street also remains positive on the bank, with a “Moderate Buy” rating and a $368 price target pointing to upside potential in late 2026.
How to play JPMorgan ahead of fiscal Q3 earnings
Beyond the immediate earnings catalyst, JPM’s capital markets business offers another reason for optimism.
Co-President Doug Petno said last month that investment banking fees and trading revenue were expected to grow by “mid-to-high teens” percentage, suggesting both businesses could contribute meaningfully to quarterly performance.
That gives investors a fundamental catalyst to assess alongside the headline earnings numbers.
Delivering on those expectations – coupled with an encouraging outlook for client activity – could strengthen the case for a recovery in JPMorgan.
Still, credit quality and funding costs deserve close attention as well. If higher loan-loss provisions or deposit expenses absorb the additional revenue, the bullish argument weakens.
A sustained rebound in JPM stock would be much more convincing if management demonstrates that business growth is translating into durable profitability.
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