Options Check-Up: Goldman Sachs, The Coca-Cola Co, Target Corporation

Analyzing recent option activity on GS, KO, and TGT

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Published on Dec 3, 2014 at 7:54 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are blue chips Goldman Sachs Group Inc (NYSE:GS) and The Coca-Cola Co (NYSE:KO), plus retailer Target Corporation (NYSE:TGT). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on GS, KO, and TGT.

  • GS closed 1.06% higher yesterday at $190.19.Year-to-date, the equity has tacked on 7.3%. Still, sentiment in the stock's options pits paints a bearish picture. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Goldman Sachs Group Inc's 10-day put/call volume ratio of 0.98 lands in its 88th annual percentile, revealing that puts have been bought to open over calls at a faster-than-usual clip of late. According to its Schaeffer's Volatility Index (SVI) of 16%, which ranks in its 21st annual percentile, GS' short-term options are relatively cheap, from a volatility standpoint.

  • KO has seen moderate success on the charts this year, adding 7.8% year-to-date, despite yesterday's 0.02% drop to $44.54. Options traders are betting on the stock's long-term uptrend to continue, as its 50-day call/put volume ratio at the ISE, CBOE, and PHLX comes in at 3.55 -- only 4 percentage points from an annual bullish extreme. The Coca-Cola Co's near-term options are affordable, on a volatility basis, according to its SVI of 18% -- in the 39th percentile of its annual range.

  • Since reporting stronger-than-expected third-quarter results on Nov. 19, TGT has added 8.2%, including yesterday's 0.4% gain to land at $73.07. Despite the stock's recent rise, options traders remain skeptical. At the ISE, CBOE, and PHLX, Target Corporation's 10-day put/call volume ratio of 1.20 ranks in its 84th annual percentile. If the equity continues to move higher, an unwinding of this bearish sentiment could create tailwinds. Per its SVI of 19% (in the 43rd percentile of its annual range), TGT's short-term options are fairly priced, from a volatility perspective.


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