Goldman Sachs says options for some major stocks look strangely cheap ahead of a long-awaited jobs report. The February nonfarm payrolls report is due out Friday morning and it will be closely watched by traders following a report blowout in January and stubbornly high inflation data that scrambled Wall Street’s economic forecasts for the year . Goldman’s derivatives research team, led by Vishal Vivek, said in a note to clients on Wednesday that economic events such as jobs reports, consumer price index reports and Federal Reserve decisions in the recent past have caused big moves for some stocks, but the options market appears underpriced this potential volatility. This offers potential opportunities for investors. “We identify 25 stocks that have averaged +/-10% aggregate movement over these three catalysts over the past year, but one-month at-the-money straddles (OTC) capturing upcoming March catalysts cost only 8 % on average,” the note reads. Straddles are derivatives that serve as a bet on volatility regardless of direction. They are essentially a call option and a put option with the same strike price. Although straddle contracts are more expensive than a directional bet, they can pay off if a stock rises or falls significantly, and the risk of the trade is still limited to the premium paid to buy the contract Several major tech companies are listed, including Meta Platforms. parent company are tearing up in 2023 and are already up more than 50% Two other tech names outperforming are PayPal and Nvidia. has given a big boost to Nvidia, whose stock is up about 60% this year, thanks to the high-performance semiconductors needed for machine learning. Excluding technology, Caesars Entertainment has already gained 28% so far and analysts see another 30% gain, according to Refinitiv. Another name on the list is Moderna, which tends to be a volatile stock. Shares of Moderna have already moved up 3% or more on 11 different trading days in 2023.
An options strategy from Goldman to take advantage of Friday’s jobs report
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