Traders in Goldman options cautious before earnings

* Traders eye May $170/$145 put spreads

* Put action on Thursday is double usual levels

* Put plays appear to be positioning ahead of earnings

By Doris Frankel

CHICAGO, April 9 (BestGrowthStock) – A number of option investors
have been placing protective positions in Goldman Sachs Group
Inc (GS.N: ) this week heading into the investment bank’s
quarterly earnings expected later this month.

Goldman shares have gained 8.9 percent over the past 25
sessions, but on the New York Stock Exchange, they were down 81
cents or 0.45 percent to $178.69 in the afternoon session.

“It would not be out of the realm of possibility that
Goldman (shares) could be back to the mid-$165 level by May
expiration,” said Scott Snyder, options trader at TOS Advisors,
a subsidiary of thinkorswim Inc in Chicago.

For the second straight session, traders circled the May
$170/$145 put spread which traded 2,500 times this morning for
about a total net debit of $3.00. Traders would make money on
the trade if shares go below $167 at May expiration.

“My best guess is that they were bought,” Snyder said,
referring to Friday’s spread activity. “It could be a
protective play against a long stock position or a bearish play
on the stock. This could be a jump on earnings.”

Goldman is expected to report quarterly results on April
20. Analysts, on average, expect the investment bank to report
a first-quarter profit (Read more your timing to make a profit.) before items of about $4.02 a share,
according to Thomson Reuters I/B/E/S.

In the afternoon session, about 31,000 puts and 41,000
calls traded in Goldman across the U.S. option market,
according to option analytics firm Trade Alert.

Even though calls outpaced puts, the number of existing put
options held by options investors in the May contract suggested
investors have overall become more cautious on Goldman.

As of Thursday’s close, total May put open interest was
more than double the amount of May call open positions as a
result of the recent spread activity, Reuters data show.

Goldman option activity was brisk on Thursday and weighed
in favor of bearish bets. Traders exchanged about 82,000 put
options, more than double the average turnover compared with
64,000 call options, also above average, Trade Alert data
show.

More than 15,000 May $170/$145 put spreads were bought late
on Thursday, said Joe Kunkle, founder of Web information site
OptionsHawk.com. “These are very bearish bets for May and
signal there is a lot of caution heading into Goldman’s
earnings.”

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(Editing by James Dalgleish)

Traders in Goldman options cautious before earnings