Goldman Sachs says buy GM, Ford options before 2011 Detroit Auto Show

Dan Akerson Chevrolet Volt

If you like auto options, now is the time to move, says Goldman Sachs. The firm is recommending that investors buy options ‘straddles’ on FoMoCo and GM ahead of this months NAIAS in Detroit. It says that Detroit may be a bigger catalyst for stock prices than in the past.

“This year’s auto show is likely to be more important than most given that the significant investor focus on a continued recovery in the U.S. auto industry after historically depressed auto sales,” the New York-based strategists wrote in a report to clients today.

Ford has risen 3.5% to $17.98 today; the highest recorded price since May of 2002. We are by no means investment strategists, so without going in depth as to what options ‘straddles’ are, we can relay this information: Ford’s straddle profits if the shares are below $15.35 or above $18.65 at expiration on Feb. 18, while the GM trade profits outside of a range of $34.45 to $41.55, the strategists said.

– By: Stephen Calogera

Source: Detroit News