Now that the Federal Reserve has announced there will be no June rate hike, investors are turning their attention squarely on next week’s Brexit vote in the United Kingdom. If you’re wondering how to trade the big vote, Goldman Sachs analyst Katherine Fogertey recently came up with three fresh trade ideas.
“With the Brexit vote a week away, the options market is not pricing in strong incremental downside to the stocks with the largest exposure to the region,” Fogertey noted.
One-month implied volatility for the average S&P 500 stock is up 16 percent, but the market is not differentiating between stocks with high U.K. exposure and the rest of the market. One way to look at this trading action is that the market is anticipating volatility, but not necessarily Brexit-related volatility.
Fogertey identified three opportunistic options trades in the market today:
- 1. Buy Penske Automotive Group, Inc. PAG 2.8% Puts
With 34 percent of the company’s sales in the U.K. and earnings due out in late July, traders can hedge…
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