I think $GS is overpriced but unsure what options strategy to use to capitalize.

[klattermusen]

I believe $GS is overpriced here. I'm not a vol gerbil so my head cannot understand overly complex things. Straight puts I get. Covered calls too. Calendar spreads are uhm....conceptually tough for me. Like calculus. I took french instead.

So can someone please suggest a reasonably straight forward options method to use for being short minded on $GS.

Thanks

 

[newwurldmn]

I believe $GS is overpriced here. I'm not a vol gerbil so my head cannot understand overly complex things. Straight puts I get. Covered calls too. Calendar spreads are uhm....conceptually tough for me. Like calculus. I took french instead.

So can someone please suggest a reasonably straight forward options method to use for being short minded on $GS.

Thanks

Buy puts or short stocks. Everything else will be Latin to you.

 

[Nobert]

To short it just because it's overpriced didn't work that well in the past 10 yrs.

 

[BKR88]

I believe $GS is overpriced here. I'm not a vol gerbil so my head cannot understand overly complex things. Straight puts I get. Covered calls too. Calendar spreads are uhm....conceptually tough for me. Like calculus. I took french instead.

So can someone please suggest a reasonably straight forward options method to use for being short minded on $GS.

Thanks

Buying puts or selling calls is the simplest but to reduce cost/risk you could:
1-Sell a call spread (example #1 below)
2-Buy a put spread (example #2 below)

Example #1:
Sell 415/425 call spread (Sept 17) for 3.68 ($368)
Breakeven = 418.68
Max loss = $632 if price closes 425 or higher
Max profit = $368 if price closes 415 or lower

Example #2:
Buy 410/400 put spread (Sept 17) for 4.27 ($427)
Breakeven = 405.73
Max loss = $427 if price closes 410 or higher
Max profit = $573 if price closes 400 or lower

***Selling call spread = selling lower strike call & buying higher strike call.
***Buying put spread = buying higher strike put & selling lower strike put.

 

[GotherL]

To short it just because it's overpriced didn't work that well in the past 10 yrs.

That's the general mentality of traders for you.. They get bearish too soon or bullish when it's too late. Some guy here posted selling puts when MRNA was sitting on a big $500 psychological (whole number) resistance level and lost 25k for his foolishness. (Post was deleted here but you can still find it on Reddit.)

 

[klattermusen]

thank you

Buying puts or selling calls is the simplest but to reduce cost/risk you could:
1-Sell a call spread (example #1 below)
2-Buy a put spread (example #2 below)

Example #1:
Sell 415/425 call spread (Sept 17) for 3.68 ($368)
Breakeven = 418.68
Max loss = $632 if price closes 425 or higher
Max profit = $368 if price closes 415 or lower

Example #2:
Buy 410/400 put spread (Sept 17) for 4.27 ($427)
Breakeven = 405.73
Max loss = $427 if price closes 410 or higher
Max profit = $573 if price closes 400 or lower

***Selling call spread = selling lower strike call & buying higher strike call.
***Buying put spread = buying higher strike put & selling lower strike put.

View attachment 265811

thank you Gothert

 

[vanzandt]

Buy puts or short stocks. Everything else will be GREEK to you.

Fixed it for ya..

To short it just because it's overpriced didn't work that well in the past 10 yrs.

I nominate this post for the ET Hall of Fame.
In it's simplicity resides the genius of innocent truth.

 

[klattermusen]

Thanks again - trade is working out. I went with the 410/400 put spread first thing this am...

 

[BKR88]

Thanks again - trade is working out. I went with the 410/400 put spread first thing this am...

A bit more profit potential but less likely to end with a profit.
Timing of the exit more difficult with the put spread vs. call spread.
Personally, I'd trade the short call spread on this trade rather than long put spread.
BE 405.73 vs 418.68
Equities still in an uptrend & GS just broke out to new highs recently.