Puts Hot as JPMorgan Smacks Goldman Sachs Group Inc (GS)

Goldman Sachs Group Inc (NYSE:GS) is succumbing to sector-related headwinds today

Feb 24, 2016 at 2:23 PM
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Goldman Sachs Group Inc (NYSE:GS) is one of the leading laggards on the Dow this afternoon -- off 1.3% at $143.06 -- as a dismal first-quarter forecast and subsequent round of bearish brokerage notes for fellow blue chip JPMorgan Chase & Co. (NYSE:JPM) weighs on financial stocks. This negative price action has puts crossing at two times what's typically seen at this point in the day. In fact, with 16,236 contracts on the tape at last check, put volume is within striking distance of its annual high, set on June 16.

Drilling down, it seems safe to assume speculative players are buying to open new positions at GS' weekly 3/4 144-strike, March 140 and 142, and April 140 puts. If this is indeed the case, the put buyers are betting on the stock to be sitting south of the strike prices at the respective expiration dates.

Widening the sentiment scope reveals a more call-skewed bias among short-term speculators. In fact, GS' Schaeffer's put/call open interest ratio (SOIR) of 0.77 sits below 88% of all comparable readings taken in the past year. In other words, traders are more call-heavy than usual among options expiring in three months or less.

In the front-month series, specifically, peak call open interest of 2,373 contracts is found at GS' March 165 strike. It looks as if the majority of positions were initiated here on Feb. 11, but with much of the action occurring between the bid and the ask price, it's hard to say whether the calls were bought or sold to open.

Outside of the options arena, most analysts remain lukewarm toward the stock -- although one firm recently named it a "top pick." Of the 13 brokerages covering the shares, six maintain a "buy" or better rating, versus seven "holds."

Technically, Goldman Sachs Group Inc (NYSE:GS) has been charting a path steadily lower since hitting its most recent high of $199.90 in mid-November. Pressuring the shares has been their 20-day moving average, and a quick rejection from this descending trendline earlier this month sent GS tumbling to a new two-year low of $139.05 on Feb. 11.

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