The clock is ticking for Goldman Sachs ( GS) to come off the "Goldman" Standard on Oct. 1 when Lloyd Blankfein will retire as Chairman and CEO of Goldman Sachs. This comes on the same day the company announced strong earnings of $5.98 per share on $9.4 billion in revenue. Both results exceeded Wall Street expectations. Institutional client revenue disappointed along with a decline total assets have weighed a bit on the stock today.
The Action Alerts PLUS holding has somewhat underperformed a few of the bigger financial names as of late but overall moved in conjunction with the group. I see the stock moving in a range now until the CEO handout. There's a solid outline on the weekly chart creating a resistance and support zone worth watching. That puts $250 as a sell target and $210-220 as a long entry.
Given the implied volatility post-earnings implosion for short-term out-of-the-money options, there's only one premium selling opportunity I can see here and that's a straddle sale with a strangle buy (iron condor with same short strike). This provides for a high potential reward although the probability to achieve a max reward is very low. Instead, I'm focused on the profitability range that is close to where I see the stock trading over the next month.
The Trade:
--Sell to open 1 August 17 $230 straddle (put and call) --Buy to open 1 August $220 put
--Buy to open 1 August $240 call
Net Credit: $700
Max Reward: $700
Max Risk: $300
Breakevens: $223 & $237
Days Until Expiration 31
Intrinsic Value: -$156
I would use a weekly close under $205 or over $260 to stop out of the position. If the value drops below $400, I would consider closing half the position if you hold more than one quantity.
