GS Earnings Spec

Most of the time I trade index options, because of the great tax benefits and more premium per contract. I do however watch a handful of stocks and one that I trade actively is Goldman Sachs (GS). Looking at the chart, GS has not done much over the last few months, but IV is starting to rise. Earning are due 1/21/10 before the market opens, and I want to get long Vega. There is two ways I can achieve a speculative long Vega position; long straddle/strangle or calendar spread. After going over the risk and reward I feel like a directional calendar will suit my risk apatite. Picking the direction is a whole different discussion, but I will set it with long Deltas.

One thing I would like to mention is that Meredith Whitney has made only one good call and since she made that one good call she has been some sort of “guru”. I don’t believe she should even be announcing her thoughts or advising investors. I will never listen to that woman and her ridiculous call on GS or any other stupid call she makes on the banking industry. Or just like the “Commodity King” Dennis Gartman, he also only made one good call, but it’s because of that one good call people think he’s a "guru". But really if you listen to him on fast money or any other show, his calls are pretty bad. Whatever he says do the opposite, he even called Warren Buffet an idiot, now that’s down right wrong. So if you are going to listen to anyone, listen to yourself.

Below is the GS trade I will set today.