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Saturday, April 13, 2024

Top Trades for Wed, 14 Oct 2020 10:06 – GS

Top Trades for Wed, 14 Oct 2020 10:06 – GS

Good morning!

Oil up to $41 on this API data:

Crude -831k Cushing + 1,6M Gasoline +1,6Mi Distillates – 3,6M

It's pretty much net 0 so I'm for shorting /CL here with tight stops above.  /RB too at $1.20.

Just a good risk/reward play – not a lot of conviction.

Don't forget our GS play from the main post for the LTP:

There's been some spillover from Main Street to Wall Street as Bank of America's (BAC) profits are down 16% in today's report and Wells Fargo's (WFC) are down 56% but Goldman Sachs' profits almost doubled expectation at $9.68 per $215 share in a single quarter – very impressive.  We don't have much banking in the LTP and GS is a good one (well, evil, but good earnings) so let's add them with the following trade:

  • Sell 5 GS 2023 $165 puts for $20 ($10,000) 
  • Buy 10 GS 2023 $170 calls for $60 ($60,000)
  • Sell 10 GS 2023 $210 calls for $40 ($40,000) 

That's net $10,000 on the $40,000 spread that's 100% in the money to start and all GS has to do is not be lower than it is today in 2.25 years and we make $30,000 (300%) – aren't options fun?  Our worst-case scenario is owning 500 shares at net $185, 15% lower than the current price and the ordinary margin requirement is just $5,718 – so it's a very margin-efficient way to make $30,000 too!