Earnings season is in full swing, and while most companies have already reported their second-quarter earnings, there are still a few stragglers left. This presents a unique opportunity for investors to capitalize on bigger-than-expected share-price moves. According to Goldman Sachs strategist John Marshall, utilizing a straddle options strategy is the perfect way to take advantage of this situation. In this article, we will explore the surprising stock movements this earnings season and highlight Marshall’s list of 10 ripe stocks for an options strategy.
Earnings season ends, but opportunities remain
As of August 10, the majority of the companies in the S&P 500 had already reported their second-quarter earnings. However, there are still a handful of companies left that will be reporting in the coming days and weeks. While the excitement of earnings season may be fading, there are still plenty of opportunities for investors to make a profit.
Goldman Sachs strategist predicts profitable play for investors
John Marshall, the head of derivatives research at Goldman Sachs, believes that the recent bigger-than-expected share-price moves present a unique opportunity for investors. In a note to clients, Marshall explained that the difference between the realized moves and implied moves for S&P 500 stocks that have reported earnings this quarter is currently at +0.1%, the highest in a decade. This discrepancy creates a profitable play for investors utilizing the right options strategy.
Surprising stock movements create chance for earnings strategy
One of the key themes emerging this earnings season is the surprising stock movements on earnings day. Stocks have been moving more than expected, creating an opportunity for investors to make a profit. This trend has caught the attention of analysts, including John Marshall of Goldman Sachs, who believe that this presents a rare chance to capitalize on the market.
Results show sales growth and earnings beating expectations
While there have been some concerns about the health of the economy, the results from companies that have reported their second-quarter earnings thus far have been quite promising. According to Evercore ISI, the sales growth across these companies has been 1.7% higher than expected, while earnings have beaten consensus by 7.2%. These positive results further reinforce the potential for profitable options strategies during this earnings season.
Goldman Sachs identifies 10 ripe stocks for options strategy
John Marshall and his team at Goldman Sachs have compiled a list of 10 stocks that they believe are ripe for an options straddle strategy. These stocks have historically seen their shares move more on earnings day than current options pricing implies. Buying straddles on these stocks ahead of their earnings announcements could prove to be a profitable move for investors. The list includes the tickers, earnings dates, implied and historical earnings day moves, the difference between the two, and the at-the-money straddle pricing targeted by Marshall.
As earnings season comes to a close, there are still opportunities for investors to profit from the market. Bigger-than-expected share-price moves have created a chance for utilizing options strategies, specifically the straddle options strategy. Goldman Sachs strategist John Marshall recommends this strategy for stocks that have historically exhibited larger moves on earnings day than what is currently implied by options pricing. With his list of 10 ripe stocks for this strategy, investors have the potential to make profitable plays in the remaining days and weeks of earnings season.
Analyst comment
Positive
As an analyst, I predict that the market will see increased activity as investors take advantage of the opportunities presented by the surprising stock movements this earnings season. Utilizing the straddle options strategy, as recommended by Goldman Sachs strategist John Marshall, can lead to profitable plays for investors.
