Investors should buy put options on the Standard & Poorâs 500 Index because the benchmark for U.S. stocks may fall back to the 11-year low it reached in November, Goldman Sachs Group Inc. said.
âDismalâ fourth-quarter profits and forecasts from companies as well as waning investor confidence in President Barack Obamaâs economic stimulus plan may drive the S&P 500 toward 752.44 in the next month, Goldman strategists said.
For investors using a âput spreadâ strategy, the highest payoff would be generated through buying March 825 puts and selling March 745 puts, Krag âBuzzâ Gregory and John Marshall wrote in a report distributed to clients today. That trade would produce $1.85 in profit for every $1 invested should the S&P 500 drop to its November low, they said.