From Goldman's Derivatives Research desk this week…

Weekly Options Watch: Preannouncements driving single stock volatility

Preannouncement activity has increased sharply in January (they did predict this, to their credit)
YTD 2023 so far 138 stocks have preannounced/revised guidance
- Avg stock experienced a move of +/- 6.7% on its preannouncement day
- Avg directional return of 1.8% (vs SPX same day return of +0.2%)

Trade #1: Buy BA Calls ahead of earnings

GS Defense Analysts point out that BA is seeing record orders for new planes & expects ongoing inflection in FCF (free cash flow) to drive the stock higher
- Global air travel mostly recovered -> airlines ordering new aircraft @ record pace
- GS believes management executed strongly to stabilize company since COVID & is well positioned to deliver long-term shareholder value
BA option prices are low ahead of earnings
- One-month IV of 40% is only in 29th %ile relative to past year
- GS recommends BUYING Feb-23 BA $210 Calls ~ $9.50 (4.6%, stock ref $206.69)

GS Homebuilders/Building Products Analysts believe market is underestimating EBITDA for WY -> sees potential upside from its resilient product portfolio amidst uncertain macro backdrop
- Defensive portfolio + evolution of climate-friendly offerings expected to reflect positively on valuation going forward
- Analysts see possible margin expansion YoY from wood product prices holding ahead of pre-Covid norms given structural shifts in underlying cost structures
WY option prices are low ahead of earnings
- One-month IV of 32% is only in its 63rd %ile relative to past year, despite upcoming earnings event
- Options market positioning is bearish as evidenced by one-month normalized put-call skew in its 94th %ile relative to the past year, suggesting Calls are attractive relative to Puts
- GS recommends BUYING Feb-23 WY $31 Calls ~$1.35 (4.4%, stock ref of $30.86)

Check back/profile for more like this -> As always, take with a grain of salt. GS is sales, after all