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Goldman Sachs Recommends 28 Put Options to Hedge Pullback (FSLR) (MOS) (CELG) (BSX) (DE)

July 10, 2014 10:52 AM EDT
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Price: $168.80 +0.81%

Rating Summary:
    29 Buy, 18 Hold, 2 Sell

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In a research note Thursday, Goldman Sachs analyst John Marshall recommended puts on 28 sell-rated stock with low put prices. The recommendation was made for investors looking to protect their portfolio in the event the recent market weakness accelerates into a summer sell-off.

"We favor buying Oct puts as they are likely to see an increase in value not just because of a short term stock price move, but also due to a potential rise in implied volatility. This rise in implied vol could benefit put buyers even if a sell-off was moderate or fleeting. Time decay on a 3-mo option is substantially less in the near term than with a 1-mo option. Oct options could benefit from the seasonality of volatility (vol has historically picked up in Sept/Oct). For stocks without Oct puts, we favor Sept/Nov," said Marshall.

Stocks with high options liquidity include:

  • First Solar (NASDAQ: FSLR)
  • Mosaic Company (NYSE: MOS)
  • Celgene (NASDAQ: CELG)
  • Boston Scientific Corp. (NYSE: BSX)
  • Deere & Company (NYSE: DE)
  • C.H. Robinson Worldwide, Inc. (NASDAQ: CHRW)
  • SUPERVALU INC. (NYSE: SVU)
  • Advanced Micro Devices (NYSE: AMD)
  • Denbury Resources, Inc. (NYSE: DNR)
  • Clorox Co. (NYSE: CLX)

Stocks with medium options liquidity include:

  • Hovnanian Enterprises Inc. (NYSE: HOV)
  • Boyd Gaming Corp. (NYSE: BYD)
  • Pinnacle Entertainment, Inc. (NYSE: PNK)
  • Airgas, Inc. (NYSE: ARG)
  • Schnitzer Steel Industries, Inc. (NASDAQ: SCHN)
  • Sigma-Aldrich (NASDAQ: SIAL)
  • QLogic Corp (NASDAQ: QLGC)
  • W.W. Grainger, Inc. (NYSE: GWW)
  • Discovery Communications Inc Series A (NASDAQ: DISCA)
  • Hershey Foods Corp. (NYSE: HSY)
  • Public Storage (NYSE: PSA)


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