Following the House of Morgan on Fed day


Is the House of Morgan a canary in the coalmine? One top educator thinks so.

Sarah Potter of told viewers of today’s Morning Market Briefing to watch calls and puts on JPMorgan Chase (JPM) for directional signals ahead of Federal Reserve decisions. In particular she focuses on options expiring in three weeks with 0.60 Delta.

She’s looking for a move today after policymakers hiked rates 25 basis points as expected yesterday. After that, TradeStation customers should look for the S&P 500 index to break through its recent resistance at 2674.

How to play that rising tide? Potter wants to buy call spread in Tesla Motors (TSLA), targeting the 340 and 345 strikes over the next 3-4 weeks. (Click here for more on the strategy.) Alternately, traders might want to sell premium in Alphabet (GOOGL), looking for volatility to erode after the Fed. She’s also hoping PayPal (PYPL) pulls back to allow a long-term entry.

Potter even had fodder for you Grinchs out there, even though December is usually a time of holiday cheer. In particular, CVS (CVS) may take a quick dive toward $68 from its current price above $70.

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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.