Thursday, January 22, 2015

Goldman's underdog strategy : buy calls on these stocks in anticipation of an earnings relief rally

Goldman’s clients are being advised to buy call options on 15 stocks in anticipation of an earnings relief rally

At Goldman Sachs, strategists are reminding clients that a very basic strategy can be very profitable. The firm is telling clients that buying calls on stocks underperforming the stock market ahead of earnings has been almost twice as profitable as buying calls on stocks that outperformed the Standard & Poor’s 500 by 3% or more.

Since 1996, this basic trading strategy has outperformed the market 12 of 19 years by an average of 9%.

Goldman is advising clients to buy calls on 15 stocks in anticipation of an earnings relief rally. Stocks include
  1. Caterpillar ( CAT )  - Jan 27, before 
  2. Danaher ( DHR ) - Jan 27, before
  3. Viacom ( VIAB ) - Jan 29, before, 
  4. Ryland Group ( RYL ) - Jan 29, before, 
  5. Deckers Outdoor (DECK ) - Jan 29, after, 
  6. Mattel ( MAT ) - Jan 30, before, 
  7. CBRE Group ( CBG )- Feb 3, after, 
  8. Ralph Lauren ( RL ) - Feb 4, before, 
  9. Lions Gate Entertainment ( LGF ) - Feb 5, after, 
  10. Hasbro ( HAS ) - Feb 9, before, 
  11. Masco ( MAS ) - Feb 9, before, 
  12. Starwood Hotels & Resorts Worldwide ( HOT ) - Feb 10, before, 
  13. Time Warner ( TWX ) - Feb 11, before, 
  14. NetApp ( NTAP )- Feb 11, after, 
  15. Fossil Group ( FOSL ) - Feb 17, after, .
All tickers (change from open, new window):
CAT,DHR,VIAB,RYL,DECK,MAT,CBG,RL,LGF,HAS,MAS,HOT,TWX,NTAP,FOSL

by market cap:
       

John Marshall and Katherine Fogertey, Goldman’s derivatives strategists, recommended February expirations and strike prices that are aligned with the associated stock prices. For example, Fossil is expected to report earnings Feb. 17. The strategist picked the February $99.50 call when the stock was at $99.

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