As the next earnings season draws near, Goldman Sachs emphasizes the opportunity for options traders to leverage the volatility associated with earnings preannouncements.
According to John Marshall from Goldman’s derivatives research team, there have been 433 preannouncements so far this year, resulting in stocks fluctuating an average of +/-6.8% during these events. April, in particular, stands out for its higher occurrence of such announcements, offering traders a distinctive chance to act.
The analysis identifies specific companies such as CNX Resources and Delta Air Lines, which have traditionally issued preannouncements during this timeframe, indicating a trend that could be exploited for trading strategies.
Strategic Trading Opportunities Identified
Goldman Sachs has identified stocks that possess attractively priced options and a track record of preannouncements. Among these are CNX Resources, Delta Air Lines, Best Buy, Fidelity National Information Services, and HCA Holdings.
This selection process is grounded in the historical tendency of these companies to preannounce in April, coupled with recent activity over the past two years. The firm asserts that the market frequently underestimates the volatility stemming from these unexpected disclosures, presenting a strategic edge to informed options traders.
The recommendation advocates for the use of at-the-money straddles, enabling traders to capitalize on movement in either direction. This approach underscores a nuanced strategy for steering the volatility of earnings season.
Goldman Sachs’ Positive Stock Recommendations
In addition to noting opportunities surrounding earnings preannouncements, Goldman Sachs has put forth a selection of stocks with potential growth prospects as the second quarter commences.
The lineup comprises United Parcel Service, Nasdaq, Arcos Dorados, Global Payments, and Arista Networks, all of which have garnered a buy recommendation from the firm.
These recommendations stem from diverse factors, including anticipated growth, strategic endeavors, and market positioning.
For example, Arcos Dorados is singled out for its robust sales performance and expansion endeavors in Latin America, despite recent fluctuations in its stock value.
Likewise, the Nasdaq is lauded for its upward growth trajectory and potential for share repurchases, reflecting broader market optimism.
