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)

by Griffin Kruse

Published on Jan 14, 2015 at 8:09 AM
Updated on Apr 20, 2015 at 5:32 PM

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.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


3 Million to Lose Jobs – and Not Because of Coronavirus?
A terrifying new trend can make you a millionaire or destroy your financial future.
Wall Street Reclaims Two Key Trendlines This Week
U.S.-China tensions and dire economic data still weigh, though
Dell Stock Jumps on Upbeat First Quarter
DELL announced an upbeat first-quarter report
Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.