Options Check-Up: American Express, Visa, and Goldman Sachs Group Inc

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

Jan 14, 2015 at 8:09 AM
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Among the stocks attracting attention from options traders lately are credit card giants American Express Company (NYSE:AXP) and Visa Inc (NYSE:V), as well as blue-chip financial firm Goldman Sachs Group Inc (NYSE:GS). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on AXP, GS, and V.

  • Shares of AXP have been relatively static over the past year, with the equity gaining about 2.4%. So far in 2015, though, the stock has surrendered about 4% to land at $89.23. In conjunction with this negative price action, bearish sentiment in American Express Company's option pits is approaching a peak, ahead of next Thursday's anticipated earnings report. AXP's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.43 ranks just 4 percentage points away from an annual high. Additionally, short-term options for the security are relatively inexpensive at the moment, with its Schaeffer's Volatility Index (SVI) of 22% ranking in the 36th percentile of all similar readings taken in the past year.

  • V has skyrocketed over the past 52 weeks, adding 17.1% to perch at $260.78, while outperforming the S&P 500 Index (SPX) by nearly 18 percentage points over the past three months. Yesterday, the credit card giant also enjoyed a $15 price-target hike to $285 from Guggenheim, underscored by a "buy" rating. Surprisingly, sentiment in the options pits has reached a bearish climax -- Visa Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.65 is the highest such reading taken over the past year. Fortunately for buyers, V's short-term options are currently inexpensive, with its SVI of 17% ranking in the 25th percentile of its annual range.

  • GS fell 0.1% yesterday to $184.93, after Nomura slashed its price target to $187 from $192, and ahead of the company's scheduled earnings report this Friday. However, the blue-chip stock is still up 4.7% year-over-year. In the same vein as the revised price target, sentiment among both options trader and the analyst community is trending bearishly. Only 27% of covering analysts rate Goldman Sachs Group Inc a "buy" or better, with the remaining 73% doling out "hold" or worse ratings, leaving the door wide open for potential upgrades to boost the shares even higher. Likewise, GS' 10-day ISE/CBOE/PHLX put/call volume ratio of 0.88 ranks higher than three-fourths of all similar readings taken over the past year -- an unwinding of this pessimistic sentiment could result in positive tailwinds for the security. Short-term options for GS are still averagely priced ahead of earnings, with its SVI of 24% ranking in the 56th percentile of its annual range.
 

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