A Winning Options Strategy for the Upcoming Earnings Season From Goldman Sachs

With second-quarter earnings season about to ramp up next week, Goldman Sachs believes there’s a strong opportunity for options traders to capitalize on market volatility.

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In a client note released Wednesday, John Marshall, head of derivatives research at Goldman, shared that his team expects investors to benefit from betting on significant stock moves around earnings announcements. Specifically, they recommend using strategic options plays to profit from volatility that tends to follow company earnings reports.

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“One of our preferred earnings-related options strategies involves buying straddles on stocks where the expected move priced into the options market is low compared to the stock’s typical reaction on earnings day,” Marshall wrote.

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He explained that applying this approach across a portfolio can act as both a hedge against broader market movements and a way to magnify returns if stocks react sharply—up or down—to earnings.

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A straddle is an options strategy where a trader simultaneously purchases both a call and a put option on the same stock, with identical strike prices and expiration dates. This technique is designed to benefit from large price swings in either direction. For the trade to be profitable, the stock’s movement must exceed the combined cost (premium) of both options.

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Marshall’s team identified several companies scheduled to report earnings this month where current options pricing suggests relatively low volatility expectations—making them prime candidates for straddle trades.

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Among the most notable names on Goldman’s radar is Netflix, which is set to report second-quarter results on July 17. The streaming giant has a track record of sharp post-earnings moves. For instance, back in January, the company’s stock surged more than 9% after its quarterly report.

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Netflix enters this earnings period already having posted a stellar performance in 2025. Through Thursday, the stock is up over 40% for the year. However, shares have pulled back slightly since peaking in late June at a record $1,339. That prior high could serve as a key level for investors to monitor if earnings results exceed expectations.

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Goldman also highlighted Fastenal and 3M as stocks worth watching next week. Fastenal, which reports earnings on July 14, has performed exceptionally well in 2025, reaching an all-time high that dates back to its IPO in 1987. 3M, reporting July 18, also recently hit its highest price level since 2021. Both companies have seen their shares rise roughly 21% year to date, putting them ahead of the broader market.

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These two industrial companies have benefited from renewed investor interest in cyclical and infrastructure-related names, especially as economic data points to continued manufacturing strength and capital investment.

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Goldman’s list doesn’t stop with next week’s earnings reports. Several other industrial giants reporting later this month also made the firm’s options trading watchlist.

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One of them is defense and aerospace contractor RTX, which will announce earnings on July 22. RTX shares have surged more than 26% this year, bolstered by growing defense budgets in the U.S. and Europe. With military spending on the rise, particularly amid heightened geopolitical tensions, RTX has enjoyed a strong rally in 2025.

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Honeywell, another major industrial name, is also set to report earnings later in the month—on July 24. While the stock has managed a modest gain of 5% so far this year, it has underperformed compared to the broader market. A strong earnings report could give it the boost needed to catch up with its industrial peers.

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Earnings season often brings heightened volatility as investors react to unexpected financial results, forward guidance, or changes in company outlooks. For options traders, this creates an ideal environment for straddles and other volatility-based strategies.

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Goldman Sachs emphasizes that while not all earnings reactions are dramatic, targeting names with a history of big moves and currently underpriced options can present high-reward opportunities. In essence, when implied volatility (expectations of movement) is low but historical earnings reactions have been large, it sets up a favorable scenario for straddle trades.

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By identifying stocks like Netflix, 3M, and RTX—where recent history suggests sharp post-earnings moves—Goldman is offering traders a blueprint for how to position themselves during this critical market period. Their recommendation also reflects confidence in U.S. corporate performance, especially among companies benefiting from long-term trends like defense spending, infrastructure investment, and content-driven media growth.

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With the earnings calendar heating up and several big names about to report, Goldman’s strategy offers a way for investors to prepare for what could be an eventful few weeks in the markets—while potentially profiting from the volatility that earnings announcements often bring.

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