The banks have had two patterns this earnings season. Both patterns start with great earnings. In the case of Action Alerts PLUS holdings JPMorgan Chase (JPM) and Citigroup (C) , the initial trading day after reporting was red. Then the two names rallied and rallied hard.
The other pattern is that of Bank of America (BAC) where the stock just went straight up. Goldman Sachs Group (GS) , also an AAP position, appears to be set up for the former pattern rather than the latter.
I like buying near-dated calls in GS. I can buy the August 3 $230 calls for less than $4.00. Considering the range Tuesday is about $7, these have a decent chance of turning a profit in the next couple of days as I think the banks are going to continue to have a nice run.
I would be a buyer of these calls looking to sell them at $5.50-$6.00 by Friday.
Trade: Buy to open 1 GS August 3 $230 call for $3.90.
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