Intel just raised its dividend...Goldman will sell you the calls and I bet you the call sellers won't loose a cent...
remember GS makes a market
Goldman Says to Buy (Sell) Calls, Not Shares, in Intel, IBM
November 17, 2010, 10:54 AM EST
By Joanna Ossinger
(Adds Cisco forecast in fourth paragraph.)
Nov. 17 (Bloomberg) -- Technology company investors should switch to call options from shares to limit their risk from cuts in government equipment orders, Goldman Sachs Group Inc. said.
Intel Corp., Motorola Inc., International Business Machines Corp., EMC Corp., Accenture Plc and Xerox Corp. are “among our top candidates” for replacing stock with call options, strategists John Marshall and Maria Grant wrote in a report today. The strategists said they screened for technology companies with high government exposure.
“The impact from a challenging government spending environment, as highlighted in Cisco’s cautious comments last week, could reverberate in tech for quarters to come,” the report said. “Relatively low implied volatility makes owning calls as an alternative to stock attractive for investors looking to maintain long ahead of key catalysts and the fourth quarter.”
Cisco Systems Inc. shares fell 16 percent, the most since 1994, on Nov. 11, after the world’s largest computer networking- equipment maker said governments in Europe, Japan and some U.S. states reduced orders in the first quarter. Earnings excluding some items will be 32 cents to 35 cents a share during the second quarter, the San Jose, California-based company forecast. Analysts projected 42 cents on average in a Bloomberg survey.
Calls give the right to buy a security at a set price. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will rise or fall.
--With assistance from Joseph Galante in San Francisco. Editors: Stephen Kleege, Nick Baker
To contact the reporter on this story: Joanna Ossinger in New York at jossinger@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net. |
