Ever on the lookout for timely trade ideas, Goldman Sachs'
options team recommended this week that clients made bearish bets on
stocks that look highly vulnerable to summer swoons.
Screening the universe for stocks that have fallen from May to August in at least eight of the past 12 years and are not rated as a "buy" by Goldman's stock analysts, Goldman found 10 stocks that it identified as good candidates for put purchases.
Screening the universe for stocks that have fallen from May to August in at least eight of the past 12 years and are not rated as a "buy" by Goldman's stock analysts, Goldman found 10 stocks that it identified as good candidates for put purchases.
A put purchase is a bearish trade that allows a trader to
profit if a stock falls the requisite amount in a given time frame, but
does not make the same trader liable to losses if the stock rises,
beyond the price paid for the options contract.
So would that actually be wise when it comes to these stocks specifically?
Cowen & Co. head of equity sales trading David Seaburg says he'd look to bet against the stock that has seen the biggest median summer drop, Aeropostale.
"Aeropostale is a structural mess. So I look at the
stock and say, I agree with the standpoint fundamentally. The stock's a short," Seaburg said Thursday on CNBC's "Trading Nation." "They've got a margin issue. They've got liquidity issues. They've just got things going on there that are really bad."
Read MoreGoldman's odd reason to bet against housing stocks
Seaburg is also no fan of Sotheby's, despite its strong run over the past month.
"They've got a new leadership, a new CEO in place that really is directionless now, and I think that they need a plan. They need to figure out how to get that momentum going and it's going to take some time," he said.
Susquehanna head of derivative strategy Stacey Gilbert said Goldman's list is useful as "a starting point," but "you have to take the next step" and look deeper into the company that you plan to bet against.
"You can't just buy an option blindly," Gilbert said. "You have to understand the story."
So would that actually be wise when it comes to these stocks specifically?
Cowen & Co. head of equity sales trading David Seaburg says he'd look to bet against the stock that has seen the biggest median summer drop, Aeropostale.
"Aeropostale is a structural mess. So I look at the
stock and say, I agree with the standpoint fundamentally. The stock's a short," Seaburg said Thursday on CNBC's "Trading Nation." "They've got a margin issue. They've got liquidity issues. They've just got things going on there that are really bad."
Read MoreGoldman's odd reason to bet against housing stocks
Seaburg is also no fan of Sotheby's, despite its strong run over the past month.
"They've got a new leadership, a new CEO in place that really is directionless now, and I think that they need a plan. They need to figure out how to get that momentum going and it's going to take some time," he said.
Susquehanna head of derivative strategy Stacey Gilbert said Goldman's list is useful as "a starting point," but "you have to take the next step" and look deeper into the company that you plan to bet against.
"You can't just buy an option blindly," Gilbert said. "You have to understand the story."
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