Here’s how Goldman Sachs is playing earnings season

Eduardo Munoz | Reuters

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 27, 2018.

This earnings season is bound to be a wild one, according to analysis by Goldman Sachs, but they have a game plan for clients to navigate it.

Based on options prices, stocks in the S&P 500 have an average implied intraday move of more than 7 percent in either direction.

“We believe earnings season is the time when fundamental investors have the biggest advantage over quants or macro investors,” John Marshall, a derivatives analyst, said in a note on Sunday. We “selected those stocks that our analysts believe are most likely to react in the direction of their earnings view,” he said.

The earnings season kicked off on Monday as Citigroup posted fourth-quarter revenue that missed analysts’ estimates by a half billion dollars, the first among U.S. banks to report results. Goldman Sachs previously predicted that 2019 earnings growth will be quite disappointing because of slow economic growth, a strong dollar and low oil prices.

Below are companies they believe will pop or drop based on earnings. In the report, they highlight specific call options to buy for the bullish calls and put options to buy for the negative.

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