Close Menu
Invest Insider News
    Facebook X (Twitter) Instagram
    Tuesday, July 1
    Facebook X (Twitter) Instagram Pinterest Vimeo
    Invest Insider News
    • Home
    • Bitcoin
    • Commodities
    • Finance
    • Investing
    • Property
    • Stock Market
    • Utilities
    Invest Insider News
    Home»Investing»Attractive puts to hedge growth risks: Goldman Sachs By Investing.com
    Investing

    Attractive puts to hedge growth risks: Goldman Sachs By Investing.com

    August 25, 20243 Mins Read


    In the current economic environment, characterized by recent equity market weakness and disappointing July employment figures, investors are increasingly concerned about potential growth slowdowns. However, analysts at Goldman Sachs have identified attractive put options as a prudent hedge against these growth risks.

    Goldman Sachs’ economists have raised their 12-month recession probability forecast by 10 percentage points to 25%, driven by a rise in the unemployment rate to 4.3% in July 2024.

    “While our economists think the risks are somewhat higher than the historical unconditional average 12-month probability of about 15%, they continue to see recession risk as limited and do not see major financial imbalance,” the analysts said.

    However, they anticipate that markets will be particularly sensitive to incoming economic data, making hedging against growth risks a strategic necessity​.

    As investors shift their focus from microeconomic factors, such as earnings, to macroeconomic indicators ahead of the September FOMC meeting, analysts recommend the use of put options on select stocks and ETFs.

    The volatility index () has decreased by 23 points since its August 5th spike, but both index and single-stock implied volatilities remain high compared to recent history. This environment presents a challenge in finding cost-effective hedges, but Goldman Sachs has identified several opportunities where options prices are relatively low despite high sensitivity to U.S. growth.

    Goldman Sachs has conducted a detailed screening of stocks and ETFs with high sensitivity to U.S. growth. The selected options have been found to offer attractive hedging potential due to their relatively low pricing in relation to the underlying assets’ growth sensitivity.

    Among individual stocks, KeyCorp (NYSE:), AerCap Holdings NV, and Fifth Third Bancorp (NASDAQ:) stand out as particularly attractive put options. These companies exhibit above-average sensitivity to U.S. growth, with options that are relatively inexpensive based on their implied volatility​.

    In the ETF space, Financials, Consumer Discretionary, and Materials ETFs are flagged as effective hedges. These ETFs have shown high beta and correlation to U.S. growth while maintaining lower options prices.

    The recommended put options on these ETFs are structured to cover upcoming macroeconomic events, including the September and November FOMC meetings, U.S. presidential elections, and various key data releases​.

    Goldman Sachs also addresses specific thematic risks, including potential drawdowns in mega-cap tech stocks and the impact of rising interest rates.

    For tech stocks, which are currently trading at stretched valuations despite recent underperformance, analysts recommend tactical hedges through put options.

    Similarly, given the elevated prices of interest rate options relative to historical levels, put options are advised to mitigate rate risks.

    Goldman Sachs estimates the beta of each stock and ETF relative to cyclicals versus defensives using weekly data over the past three years. This approach focuses on the daily sensitivity of assets to growth risks rather than relying solely on historical relationships.

    The selected assets for hedging have liquid options markets and are highly correlated with U.S. growth, ensuring their tradability and relevance.





    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleWhy Bitcoin (BTC) Price Could Hit $66,000 Again
    Next Article Bitcoin Price Could Rally To $80,500, But Here’s What Needs To Happen

    Related Posts

    Investing

    Analyses et prévisions relatives aux crypto-monnaies

    June 29, 2025
    Investing

    Les États-Unis peuvent-ils mettre fin à leur dépendance vis-à-vis de la Chine pour les terres rares avant qu’il ne soit trop tard ?

    June 9, 2025
    Investing

    Tesla corrige après un rallye de 23% en mai : Faut-il craindre un déclin durable ?

    June 5, 2025
    Leave A Reply Cancel Reply

    Top Posts

    Action Ganglong China Property Group Limited | Cours 6968 Bourse Hong Kong S.E.

    July 31, 2007

    les fondamentaux de l’or restent bons

    September 4, 2007

    les fondamentaux de l’or restent bons

    September 4, 2007
    Stay In Touch
    • Facebook
    • YouTube
    • TikTok
    • WhatsApp
    • Twitter
    • Instagram
    Latest Reviews
    Bitcoin

    Le Bitcoin peut-il encore faire x100 ? Bienvenue dans le « Saylor Cycle » du BTC

    June 17, 2025
    Stock Market

    Phil Withey joins Hiscox London Market as CTO

    April 28, 2025
    Property

    China’s Loan Expansion Fell Short of Expectations in May

    June 13, 2025
    What's Hot

    U.K. stock market is falling behind Canada in value of listed firms

    October 10, 2024

    Découvrez ce meme coin qui surfe sur la performance du Bitcoin

    March 27, 2025

    Metaplanet Porte ses Réserves à 10 000 Bitcoin après un Nouvel Achat Massif

    June 16, 2025
    Most Popular

    Schroders chair Corley to join board of London Stock Exchange-owner | Money News

    May 30, 2025

    Les saignements Bitcoin, les stocks coulent et les tarifs pic – est-ce le début d’un moment mondial de vente?

    April 7, 2025

    Le produit d’épargne pour financer la défense va aider “des entreprises à vendre des armes à l’étranger”, dénonce l’ONG Reclaim Finance

    March 20, 2025
    Editor's Picks

    UK house prices could surge in 2025: prediction

    October 27, 2024

    RBC iShares élargit son offre de produits iShares Core grâce au lancement d’un nouveau FNB

    June 26, 2025

    la Fed patiente, le Bitcoin en valeur refuge

    May 20, 2025
    Facebook X (Twitter) Instagram Pinterest Vimeo
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions
    © 2025 Invest Insider News

    Type above and press Enter to search. Press Esc to cancel.