JPMorgan says buy puts in flagging momentum stocks like Tesla

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The rotation into cheaper stocks and those tied to the economic reopening presents a chance for options traders to make money on the downside, JPMorgan said.

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Growth stocks saw their shares surge last year, but have hit a slowdown — which means options traders may have an opportunity to make money, according to JPMorgan. "The correlation of Growth and Momentum is broken, driven by a swift market re-allocation towards Value amid a view the economic reopening will drive inflation and interest rates higher, headwinds for stocks that benefit in deflationary environments such as Technology," the firm said in a note to clients.

That breakdown means some of the previous high flyers could see downside volatility in the months ahead, JPMorgan said. The firm identified stocks that had breached at least three of five technical signals, including the 50-day and 100-day moving averages.

 

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