JP Morgan derivatives strategist Shawn Quigg urged investors to double down and said the likelihood of tax reform was being underestimated, CNBC reports.
“We think the most significant near-term upside catalyst for equities is still ahead – passage of the US Tax Bill,” Quigg wrote in an email, according to CNBC. “Our analysis indicates the market is significantly underestimating the probability of tax reform passage.”
“We think the potential passage of tax reform could provide 5 percent near-term upside to the S&P 500,” he added.
Quigg said investors should buy call options in the following companies: Hilton Worldwide, Southwest Airlines, E-Trade, Regions Financial, CF Industries, and ConocoPhillips. A call option is an agreement that gives an investor the right to purchase stock at a specific price, at a specific time.
The president has remained hopeful tax reform will past in 2017, and promised a simpler tax code that would benefit job producers and the middle class. The Senate is expected to hold a vote in the next several days, but it remains unclear if they have the required 51 votes to pass the bill.
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