Goldman Sachs Golden

11:00am (EST)

Goldman Sachs (GS, $129.08, up $4.75) is pushing higher this morning despite the Dow being off triple-digits. The stock is up nearly 4% as the company is set to report earnings Tuesday morning.

In the Weekly Wrap last night I profiled the April 140 calls (GSDH, $2.32, up $1.42) and said to try and get into them at $1.00 or less. The calls opened this morning at 69 cents and nearly 6,000 contracts have traded thus far. Obviously, if you got in the options this morning, you are doing rather well.

I factored in a 15% move for the stock by Friday which would get the stock to $143 and I said the calls would be worth $3.00, or a 200% profit if it plays out that way. That price is the intrinsic value but as you can see, the premiums are really high meaning we could reach $3 for the calls by Tuesday if Goldman continues higher.

Either way, you could sell half now and take all of the risk out of the trade going into earnings. You would still enjoy further gains and the 200% you make on half the position is like making a 100% on the entire position.

Goldman was my favorite play out of the Monday Morning Playbook in case you couldn’t tell…

Rick Rouse
Rick@OptionsMentoring.com

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