JPMorgan ‘Options Whale’ Worries Resurface as Stocks Extend Drop

To Wall Street worrywarts, a large options position owned by a JPMorgan Chase & Co. equity fund has the potential to add fuel to this sweeping US stock selloff.

The $16 billion JPMorgan Hedged Equity Fund (JHEQX), a long-stock product that uses derivatives to protect its portfolio from declines and volatility, holds tens of thousands of protective put contracts expiring Friday with a strike price not far below the current level of the S&P 500.

That matters because dealers on the other side of the trade risk unwanted exposure as the expiration nears and the index threatens ...