It's earnings season again, and both the U.S. stock market and major index-weighted stocks are hitting new highs. Goldman Sachs strategists are particularly optimistic about this quarter’s earnings from financial and banking stocks and have recommended four earnings-season options strategies this week:
The focus is on three financial stocks:
1. Buy an at-the-money call option on $Wells Fargo(WFC)$ ：Strike: $82，Expiry: July 25
Goldman analyst Richard Ramsden is bullish on Wells Fargo, citing benefits from the June removal of the asset cap, which had previously restricted the bank’s growth. He highlights three key earnings growth drivers:
Reinvesting to reclaim lost deposit market share, and using that capital to expand loans and securities portfolios;
Deploying into low-risk-weighted assets like securities and repos to utilize balance sheet capacity constrained by SLR;
Reducing special expenses as technology streamlining curbs risk and control-related costs.
Overall, Ramsden estimates these drivers could boost WFC’s EPS by 14%-19%.
2. Buy an at-the-money call option on $Charles Schwab(SCHW)$ )：Strike: $93，Expiry: July 25
Goldman analyst Alexander Blostein sees upside in Schwab’s EPS, driven by net income growth、resilient retail trading and capital return dynamics.
He notes Schwab’s positive Q2 growth in cash-related revenues, outperforming peers, and expects core cash balances to accelerate in H2 2025, further supporting EPS growth. With improving AUM and cash dynamics, Schwab’s earnings outlook remains above consensus, and its valuation (NTM P/E) is attractive compared to peers.
3. Buy an at-the-money call option on $Interactive Brokers(IBKR)$ ：Strike: $60，Expiry: August 15
Goldman analyst James Yaro favors IBKR among brokers and crypto firms. He expects outperformance driven by strong volumes in equities, options, and futures and balance sheet growth.
He projects Q2 revenue to exceed industry averages, with retail trading in April being particularly strong. June trading volumes also remained high. IBKR reported a 32% YoY increase in total accounts, and Yaro sees potential for further market share gains due to its superior products and tech, which should support higher DARTs and balance sheet expansion.
On the bearish side:
4. Cautious stance on Southwest Airlines ($LUV)
Despite Delta’s strong earnings boosting the sector, Goldman’s Catherine O’Brien maintains a cautious view on LUV. She believes:
Demand remains below supply, even with reduced capacity
LUV is likely to cut Q3 capacity further due to weak demand
EPS forecasts for 2025/26/27 are revised down by 25% / -11% / -9%, due to lower unit revenue expectations and higher jet fuel prices
Moreover, Goldman also listed 15 stocks where options implied volatility around earnings is underestimated, compared to their actual moves over the past 8 quarters. This suggests potential for straddle trades. The most attractive—based on liquidity and volatility mispricing—include:
Netflix ($NFLX)
BlackRock ($BLK)
RTX Corp ($RTX)
Comments