Buy Apple (AAPL) Options Ahead of Catalysts - Goldman Sachs

Options strategists at Goldman Sachs are recommending buying options in Apple (NASDAQ: AAPL) ahead of catalysts.

"Apple implied volatility is too low, in our view, ahead of upcoming catalysts," the strategist said. "Three month implied vol of 28% is the lowest level vs the S&P500 in > 1yr."

The firm is recommending buying the May-16 $95 Straddle.

"While earnings is still a couple of months away, we believe Apple option prices have declined too much given upcoming catalysts including a potential product day – the reason to put the trade on now – and capital allocation news the April earnings," strategist Katherine Fogertey said. "AAPL 3-month implied volatility of 28% is lower than prior to earnings, and is trading in-line with 1-year average levels. We note the ratio of AAPL 3m implied volatility to the S&P500 is at the lowest level in over a year despite upcoming catalysts. Straddle buyers risk losing the premium paid if shares close at the strike price at expiration."

The firm provided the following chart:

In addition the firm is recommending: buying Ralph Lauren (NYSE: RL) options for earnings 4-Feb, buying Johnson & Johnson (NYSE: JNJ) options for FDA ruling 9-Feb and selling Mylan (NYSE: MYL) options for earnings 10-Feb.

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