Goldman Sachs Reveals: How to Trade the Next Earnings Season with Options

Wall Street's playbook just got an upgrade—and it's all about leverage, timing, and calculated risk.

Forget buying the rumor and selling the news. The real action this earnings season won't be in the stocks themselves. It'll be in the contracts wrapped around them. Options trading is stepping out of the shadows and into the mainstream strategy playbook, offering a way to amplify gains, hedge bets, and navigate volatility without tying up massive capital.

The Strategic Pivot

Why the shift? Earnings reports create binary moments—stock prices gap up or down on results. Buying shares outright means accepting full exposure to that swing. Options let you define your risk upfront. Want to bet on a beat? Buy calls. Expecting a miss? Puts or spreads can limit downside. It's capital efficiency meets tactical precision.

Volatility Is the Asset

Earnings season is volatility harvest time. Implied volatility—priced into options ahead of reports—often inflates, creating premium-selling opportunities. After the announcement, that volatility frequently craters. Savvy traders structure positions to capitalize on that cycle, not just the stock's direction.

A Word of Caution

This isn't free money. Options expire. They decay. A correct view on a stock with bad timing still loses. It requires more homework—analyzing volatility surfaces, understanding Greeks, and managing positions actively. For every trader leveraging a small stake into a win, another watches their premium evaporate to zero. It's the market's way of reminding everyone that complexity usually benefits the house. After all, in finance, if a strategy sounds smart and simple, a banker probably already packaged it into a fee-generating product.

The bottom line: The tools for the next earnings season are here. They're powerful, accessible, and waiting. Whether they build wealth or just generate commission flow for the brokers depends entirely on the hands holding them.

Key Takeaways

• Goldman Sachs strategists expect post-earnings volatility to exceed what's currently being priced into options.
• They argue options traders are underestimating the potential upside for stocks including Meta, UnitedHealth Group, and Robinhood, which they expect to beat earnings expectations.
• Southwest Airlines and Texas Instruments are among the stocks that could decline more than traders expect following their quarterly reports.

Earnings season is around the corner. Goldman Sachs' analysts have ideas about how to trade it.

Options pricing suggests traders expect the average S&P 500 stock to move up or down 4.5% after earnings, NEAR the lowest level of implied volatility in the last 20 years, according to Goldman. Just two quarters ago the average S&P 500 stock moved 5.4% on earnings, their highest volatility since 2009.

That disparity likely reflects expectations for a low-volatility earnings season, Goldman's analysts wrote. "But we believe the fundamental drivers of earnings volatility remain,” they said.

Why This Matters

Earnings reports are often stock-moving events that can shake or bolster an investor's faith in a company. Investors can use options strategies to reduce the cost of either augmenting or closing a position after earnings.

At the sector level, Goldman sees the most opportunity for post-earnings volatility in utilities, healthcare, materials, and industrials stocks. Utilities in particular have been abnormally volatile in recent quarters. Volatility has declined in most other sectors, including tech, over the past year. 

Goldman sees good reason to expect more upside than downside this coming earnings season. Goldman’s S&P 500 earnings estimates ROSE 5%, and their price target for the index increased 8% over the past three months, but the index itself rose just 3%, suggesting "improvement in fundamentals has outpaced the rise in stock prices."

Individual investors were aggressive buyers of single stocks and ETFs over those three months, which the analysts called “a positive for forward equity performance.” 

To identify what they believe to be the best opportunities for investors heading into earnings season, Goldman analysts identified 25 stocks on which they hold “out-of-consensus" earnings views—meaning they’re more optimistic or pessimistic than those of the average Wall Street analyst—and see the most potential for traders to profit from options strategies. 

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“Buy single stock options to position for big earnings-day volatility this quarter,” Goldman wrote.

The biggest names in Goldman’s list of companies whose earnings are likely to surprise to the upside are Meta Platforms (META), UnitedHealth Group (UNH), Arista Networks (ANET), and Robinhood (HOOD). Investors could benefit from buying just out-of-the-money call options in these names if earnings are as strong as Goldman’s analysts expect. 

On the flip side, Goldman expects margin pressure at Texas Instruments (TXN) and Southwest Airlines (LUV) to weigh on their stocks this earnings season. If that plays out, traders could profit from buying slightly out-of-the money put options.