Earnings Preview: American Express, Goldman Sachs, Citigroup

Analyzing recent option activity on American Express Company (AXP), Goldman Sachs Group Inc (GS), and Citigroup Inc (C)

Apr 15, 2015 at 12:53 PM
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Among the stocks gearing up to report earnings tomorrow are blue chips American Express Company (NYSE:AXP) and Goldman Sachs Group Inc (NYSE:GS), as well as fellow financial firm Citigroup Inc (NYSE:C). Below, we'll gauge the pre-earnings temperature of AXP, GS, and C.

  • The shares of AXP have had a rough start to 2015, down 14% year-to-date to reach $80.04. Despite this downtrend, traders have been favoring American Express Company calls over puts in the options pits. During the past 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.82 AXP calls have been bought to open for every put -- a ratio that stands in the 89th percentile of its annual range. Traders anticipating post-earnings upside have history against them -- in the session immediately following its last four earnings reports, AXP has lost an average of 1.8%. Short-term options are available for relatively fair prices, as the security's Schaeffer's Volatility Index (SVI) of 20% ranks in the 46th percentile of all equivalent readings taken over the past 12 months.

  • The shares of GS are 1% higher at $199.65 -- and earlier touched a six-year high of $199.77 -- bringing their year-to-date lead to 3%. Not surprisingly, sentiment in the options pits has been optimistic, as Goldman Sachs Group Inc's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.40 reads in the 94th percentile of its annual range. Mirroring this indicator is GS' Schaeffer's put/call open interest ratio (SOIR) of 0.80, which is lower than 95% of all similar readings taken in the past year. Meanwhile, in the session immediately following its last four earnings reports, GS has lost an average of 0.5%, including a 2.6% dip in October. Short-term options are available for relatively attractive prices, as the equity's SVI of 19% stands in the 36th percentile of all equivalent readings taken over the past 12 months.

  • C has been choppy over the past couple of months, trading between support at $51 and resistance in the $54 region. Today, the shares are up 0.9% to reach $53.18. Calls have grown increasingly popular in the options pits, as Citigroup Inc's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.26 stands higher than 96% of all similar readings from the past year. On the earnings front, C has enjoyed a positive post-earnings session in three of its last four trips to the confessional, for an average gain of 1.7%. Traders are paying historically modest prices for their near-term bets on the stock, as its SVI of 22% stands in the 35th percentile of its annual range.

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