Goldman's profitable options strategies

[foroom lluzers]

The study examined a portfolio of 385 major stocks, including perennial favorites . Puts and calls that expired in a month and were 10% out-of-the-money were then sold at the bid price, and allowed to settle at expiration.

http://www.barrons.com/articles/SB50001424053111904819604577643410543502878

Goldman Sachs' derivatives strategists : “Call buying before earnings of solid investments , offers strong risk-reward and allows investors to gain upside exposure while limiting risk." If you had used this strategy heading into this earnings season the rewards would have been highly profitable. Returns from buying call options of the first 13% of companies in the S&P 500 to report amounted to returns over 100%,


The results are more related to psychology and Goldman's sales teams.Investors like certainty and add to investments ,after getting confirmations from earnings reports.Goldman sales staff do the rest.

 

[options-george]

You can assume that this is fairly much bonkers.

Firstly it does not make sense - it implies that option market makers (whether human or not) do not know how to value the options correctly.

Secondly do you really think that if Goldman found out that it was possible to make money in this manner that they would happily disclose all that info to Barrons, rather than trading it themselves where possible and/or selling this advice to their institutional and high net worth clients for top dollar?

Any bank or fund works extremely hard these days to make any type of return from their trades, let alone 100% returns!!!

Just my two pence (as usual in line with my usual opinion on retail traders going into options). :cheesy:

 

[foroom lluzers]

IMHO

Look at your personality .Are you a winner ot loser .Do a google search on LOSERS VERSUS WINNERS.
If this is bonkers , then the stuff on internet sites , is useless .

You show people . how money is made , the forum winners or losers come out with clever opinions.

 

[options-george]

IMHO

Look at your personality .Are you a winner ot loser .Do a google search on LOSERS VERSUS WINNERS.
If this is bonkers , then the stuff on internet sites , is useless .

You show people . how money is made , the forum winners or losers come out with clever opinions.

Hey foroom lluzers

Wanted to chim in and provide a different perspective, based on what I have learned from conversations with many traders, including professional (non-retail) ones.

I would say that I try to be a realist, and I have about the right amount of scepticism

Thanks for sharing the link in any case though.

 

[foroom lluzers]

Any bank or fund works extremely hard these days to make any type of return from their trades, let alone 100% returns!!!

There are psychological and systematic reasons , why this would work for Goldmans and not work for others.There is something to learn here.

Investors require certainty before investing , earnings results provide the confirmation bias ,therefore investors invest more ,pushing prices higher.

Goldman's analysts get in with their analysts reccomendations to investors , ramping up the stocks with positive earnings results , this pushes stocks even higher.

It would not work for retail , because retail has not got the the Goldman system in place .

 

[Convergence]

hey foroom luzers u seen this report on options activity in the eurodollar?

http://www.zerohedge.com/news/2017-05-11/betting-against-june-rate-hike-somethings-going

 

[foroom lluzers]

hey foroom luzers u seen this report on options activity in the eurodollar?

http://www.zerohedge.com/news/2017-05-11/betting-against-june-rate-hike-somethings-going

I don't follow this short term trading .I bet on egbp going up because 1.30 is rejected on gbp usd.

Refer to Macbeth

This is a line that is spoken in Act I, Scene 4 by King Duncan. He is talking to Malcolm after Malcolm has reported to him that the Thane of Cawdor has been executed. What Duncan means by this is that there is no way to tell what a man is like -- what his character is -- by looking at his anylysis.

 

[Convergence]

I don't follow this short term trading .I bet on egbp going up because 1.30 is rejected on gbp usd.

Refer to Macbeth

This is a line that is spoken in Act I, Scene 4 by King Duncan. He is talking to Malcolm after Malcolm has reported to him that the Thane of Cawdor has been executed. What Duncan means by this is that there is no way to tell what a man is like -- what his character is -- by looking at his anylysis.

if there was an icon for 'scratching head looking bemused' that would be my reply I dont trade the eurodollar or options either just thought it might be more your terrain

 

[Windlesham1]

For us little guys.... Trade 32 from my site

Here’s the Plan

June FTSE expiries-19 days to go. Buy the 7625 call @22, sell 2 of the 7700calls @11.5– result small credit of 1. Buy the 7450 [email protected],sell 2 of the 7350 puts @15, thus a small debit of 0.5. Overall more or less zero.

What’s the Point?

Unused margin no longer sits, idly losing value. Thinking that the market has run its course, (or perhaps not) we are thus positioned for moves either way. We realise profits as the market moves above 7625, or below 7450. Risk? what about the risk? This is the interesting part. With both sides the result is we own some options and have sold more. Ponder anew. We therefore own a spread, and potential value, along with some short options. Our 7625/7700 spread is locked in should the market go that way.Thus the 7450/7350 is too.

Where is the risk?….7775. The puts? Risk at….7250. Understood?

Max Reward

With a market drop our puts thus give 100, or subsequently on a rise, the calls give 75.

 

[foroom lluzers]

http://www.cnbc.com/2016/04/22/the-goldman-strategy-thats-returned-105-in-days.html