Call Buying Surging as Goldman Sachs Hits New Highs

GS stock hit a fresh high yesterday

Josh Selway

Dec 17, 2019 at 9:58 AM

Goldman Sachs Group Inc (NYSE:GS) has benefited from the recent stock market rally, hitting a 52-week high of $230.70 yesterday. During this breakout, call buying has ramped up at the major exchanges. This is according to the 10-day call/put volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) which, at 4.24, ranks in the 100th annual percentile.

The front-month December series saw some of the action during this time frame, but going out further, other traders were opening positions at the January 2020 230- and 250-strike calls. Still, near-term options look attractively priced at the moment, based on the 30-day at-the-money implied volatility of 19.4%, a number that ranks in the low 7th annual percentile, hinting at unusually low volatility expectations at the moment.

Most analysts still have bearish rating on the banking giant, however. By the numbers, seven of 12 brokerage firms have "hold" or "strong sell" recommendations. But it was actually a price-target hike out of Wells Fargo that put GS shares on our radar this morning, as an analyst there bumped their price target to $280 from $240. Goldman Sachs shares this morning are up 0.7% at $229.86.

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