Earnings Tuesday

Get Positioned in GS, Perhaps BBY

By Bryan Bottarelli
Monday, December 11, 2006 9:39 AM EST
Mon, 11 Dec 2006 14:39:00 GMT

Dear Bottarelli Research Member,

Two important earnings announcement are being released on Tuesday — and each announcement has critical trading implications. If you’re the try of trader who likes to make earnings plays, then this alert is right up your alley!

The biggest announcement will come from Goldman Sachs Group (GS – NYSE). The incredible explosion of M&A activity combined with low interest rates sets the table for a blockbuster Q4 out of GS. The huge fees collected from advising on all the leveraged buyouts and underwriting the bond offerings are why analysts are calling for GS to earn an even $6.00 per share this quarter — versus $3.35 last quarter. That’s an eye-popping year over year increase. And in fact, the whispers are that that number still needs to be revised upwards! Based on the coming announcement on Tuesday, let’s get positioned to ride some speculative upside in GS. Here’s the play:

GS

PLAY: Buy the GS January 220 Calls (GPY AD) at or under $4.10, good for the day. Current bid/ask spread is $3.60 to $3.80. Place a protective stop loss at $2.00.

Also looking to report a strong quarter on Tuesday is Best Buy (BBY – NYSE). The early indication is that BBY will earn $0.35 per share versus $0.28 last year, which is also a strong improvement (but nowhere close to what GS is expected to report). As a result, I’ll refrain from issuing a Best Buy trade recommendation, although you’re certainly welcome to make a play yourself. The BBY January 55 Calls (BBY AK) for $2.00 to $2.10 look particularly attractive.

Remember, even if GS rallies in anticipation of tomorrow’s earnings call, we’ll be in position to take a profit.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

© 2012 CSR Group, LLC. All rights reserved. Published in USA.

Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.

Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.

CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.

Bottarelli Research alerts contain time-sensitive information, and are published and distributed to members with urgency. Because of this, not all published materials can be adequately proofread, and an occasional spelling or grammar error may exist.


Other Options Alerts From December 2006