Schaeffer's Top Stock Picks for '25

Earnings Preview: UnitedHealth Group Inc, Goldman Sachs Group Inc, and Citigroup Inc

Analyzing recent option activity ahead of earnings on UnitedHealth Group Inc (NYSE:UNH), Goldman Sachs Group Inc (NYSE:GS), and Citigroup Inc (NYSE:C)

Oct 14, 2015 at 1:16 PM
facebook X logo linkedin


The Dow is decidedly lower this afternoon, as a disappointing forecast from blue-chip Wal-Mart Stores, Inc. (NYSE:WMT) weighs on investor sentiment. While WMT won't unveil its final results until later this season, index peers UnitedHealth Group Inc (NYSE:UNH) and Goldman Sachs Group Inc (NYSE:GS) will take their turns in the earnings confessional tomorrow morning. Joining them will be financial firm Citigroup Inc (NYSE:C). Below, we'll take the pre-earnings temperature of UNH, GS, and C.

  • Put buyers have been increasing their presence on UNH ahead of earnings, per the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.50 -- in the 87th annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip. Technically speaking, UNH has put in a strong performance in 2015 -- up 20% at $121.84 -- making it possible that some of the recent put buying is a result of shareholders protecting paper profits.

    Regardless, premium on the equity's near-term options is still relatively inexpensive, per UNH's Schaeffer's Volatility Index (SVI) of 25%, which sits lower than 66% of all comparable readings taken in the past year. Looking back over the past eight quarters, UnitedHealth Group Inc has averaged a single-session post-earnings move of 3% -- roughly in line with the 3.3% the stock's near-term at-the-money (ATM) straddle is pricing in this time around.

  • GS is making waves today, amid reports the bank is being investigated as part of a wider Malaysian money-laundering probe. At last check, the stock is off 0.5% at $179.99 -- widening its year-to-date deficit to 7.1%. The security could see a little more action tomorrow, considering its near-term ATM straddle is pricing in a 2.5% single-session post-earnings move -- a wider swing than the 1.3% GS has averaged over the last eight quarters. Option traders, meanwhile, have been lining up on the bullish side of the fence ahead of earnings, per GS' 10-day ISE/CBOE/PHLX call/put volume ratio of 2.12 -- in the 88th annual percentile. Those purchasing Goldman Sachs Group Inc's short-term options are paying relatively tame premiums, historically speaking, as its SVI of 23% rests below 67% of comparable readings taken in the past 12 months.

  • Over the last eight quarters, C has moved an average of 3.2% in the session subsequent to reporting, and the options market is expecting more of the same this time around. -- per the security's near-term ATM straddle. Speculators are expecting this action to resolve to the downside, based on C's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.92, which sits just 2 percentage points from a 52-week peak. Meanwhile, the security's SVI of 26% ranks lower than 60% of similar readings taken in the past 12 months. On the charts, Citigroup Inc has surrendered over 6% in 2015 -- including today's sector-related 1% drop that has the stock circling around $50.72.
 
 

You have the chance to join one of Bernie's most exclusive programs, complete access at HUGE savings!

As we prepare for a new administration to take the reins in Washington, the near-term market landscape is rife with uncertainty.

The Federal Reserve has already hinted at the turbulence ahead, lowering its interest rate outlook for 2025.

Meanwhile, breakthroughs in artificial intelligence (AI), quantum computing, and other transformative sectors have unlocked incredible profit potential.

But these opportunities are fleeting, and timing is everything. That's where Quick-Hit Trader comes in.

Quick-Hit Trader is designed for precision and speed, getting you in and out of the market in a flash. While other investors scramble to navigate volatile conditions, you'll have access to expertly curated trades that leverage these rapid shifts to deliver explosive profits in short order.

This is your chance to capitalize on the fast-moving market like never before. Are you ready to make your move?