Goldman Sachs remains optimistic about the upcoming earnings season, despite forecasting increased trading volatility. According to the firm, investor positioning appears balanced, despite concerns about potential crowding among retail and hedge funds. John Marshall of Goldman Sachs indicated that options data suggests a “bullish” stance among investors.
Marshall explained that put-call skew on S&P 500 single stocks is a useful tool for assessing positioning among short-term hedge fund and retail traders. The put-call skew, which measures the relative demand for put options versus call options, has decreased from multi-year highs in April to average levels in July. Currently, this metric sits slightly below average, suggesting a degree of crowding but not enough to trigger a significant warning.
Concerns have been raised about all-time-high call option volumes in single stocks and indexes, with some investors questioning whether this signals excessive retail participation. However, Goldman Sachs believes that price-based measures like put-call skew offer a more reliable indication of crowding imbalances.
Marshall clarified that the popularity of Tesla options and zero-day-to-expiration (0DTE) SPX options are primary drivers of the elevated options volumes. He added that the balanced put-call skew indicator is more representative of broad positioning. Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base.
