Goldman Sachs Group Inc (GS) Plunge Brings Out Put Sellers

Goldman Sachs Group Inc (GS) is just one of several bank stocks taking it on the chin

Jun 3, 2016 at 2:59 PM
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Bank stocks are feeling the heat today, as the downbeat jobs report weighs on expectations of a June rate hike. Among the casualties is financial giant Goldman Sachs Group Inc (NYSE:GS), which is leading the Dow lower -- off 1.8% at $156.40. Meanwhile, the stock's put options are in high demand.

By the numbers, roughly 23,000 GS puts have been exchanged, quadrupling the expected intraday rate. The most active strike is the out-of-the-money June 145 put, where sell-to-open activity is detected -- and confirmed by data from the International Securities Exchange (ISE). By writing these options, the sellers anticipate GS will maintain its perch atop $145 through front-month expiration, at the close on Friday, June 17. Historically speaking, the shares haven't settled a week south of the strike since April 2013.

In recent weeks at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), put writing has been popular among GS options traders. Specifically, 6,225 puts have been sold to open -- nearly doubling the 3,221 contracts bought to open.

From a different perspective, though, short-term calls have had an advantage over puts. GS sports a Schaeffer's put/call open interest ratio (SOIR) of 0.75, indicating call open interest outweighs put open interest among options with a shelf-life of three months or less. Additionally, this SOIR rests in the bottom quartile of its annual range, so the preference for short-term calls over puts is relatively elevated.

Technically speaking, Goldman Sachs Group Inc (NYSE:GS) hasn't been anything to write home about. The financial stock has sunk nearly 13.2% year-to-date, and is currently in danger of closing below its 100-day moving average -- which acted as a strong layer of pressure in late 2015.

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