Big bank earnings kick off next week with JPMorgan Chase, Wells Fargo, Bank of America, Citigroup and Goldman Sachs all on tap to report fiscal 2015 second-quarter results. And on Thursday, options traders are piling into one name in particular ahead of its report on Tuesday before the bell: JPMorgan.
"More than 100,000 call contracts exchanged hands today and that's more than two times its daily average," options expert and CNBC Contributor Mike Khouw said Thursday on CNBC's "Fast Money." And according to Khouw, a majority of the activity was spurred by a trade betting that JPMorgan could rally more than 4 percent by the end of next week.
Specifically, that trader purchased 20,000 of the July 67.50 calls and sold 40,000 of the July 70 calls for a total cost of 40 cents. In this strategy, the trader makes money if JPMorgan shares rally to $70 by July expiration, or next Friday.
"This is a really interesting trade because over the course of the past eight quarters this is approximately the magnitude of the move we've seen in the stock post-earnings," said Khouw. "This is a really intelligent way to spend a small amount of money to make a bullish bet that the stock rallies after earnings."
JPMorgan Chase has outperformed the broader market year-to-date. The stock is up 7 percent while the XLF, the ETF that tracks financials, is down less than 1 percent in the same period.
Wall Street analysts surveyed by FactSet are expecting the company to earn $1.43 in the second quarter on $24.46 billion.