Summary of Options Pricing for Goldman Sachs and Wells Fargo Earnings

Author: Koen Hoorelbeke, Investment and Options Strategist

Date: October 9, 2026

Overview

In a significant earnings reporting period, six major US banks are set to announce their third-quarter results within a span of 24 hours. This article focuses on the options pricing for Goldman Sachs and Wells Fargo, which report on October 13, 2026. The analysis highlights how the options market anticipates price movements for these banks, revealing contrasting historical reactions and current market expectations.

Understanding Priced Moves

The options market assigns a price to the expected movement of a bank's shares around the earnings report. This is calculated using the at-the-money straddle, which combines the costs of both call and put options. The resulting percentage indicates how much the market expects the stock to move, but its significance varies based on historical performance. For instance, a 5% expected move may be substantial for one bank but modest for another.

Comparison of Priced Moves

The priced moves for the banks reporting are closely grouped between 3.9% and 5.0%. However, when compared to their historical median moves, Goldman Sachs and Bank of America are priced at about 2.4 times their usual reaction, while Wells Fargo's pricing is slightly below its historical average. This discrepancy suggests that the market anticipates more volatility than usual for Goldman Sachs and Bank of America, while Wells Fargo's expected move is more in line with its historical performance.

Goldman Sachs: Priced at 2.4 Times Its Usual Move

Goldman Sachs is expected to have a priced move of approximately 4.7% based on a share price of $887.20. Historically, its median reaction has been around 2.0%, indicating that the market is anticipating a significantly larger movement this time. Two strategies are proposed for traders with differing views:

• Iron Condor: This strategy is for those expecting a smaller move, allowing traders to profit if the stock remains within a specified range.
• Long Strangle: This strategy is for those anticipating a larger move, where traders buy out-of-the-money calls and puts to benefit from significant price changes.

Wells Fargo: Priced at 0.9 Times Its Usual Move

Wells Fargo's expected move is about 5.0%, slightly less than its historical median of 5.5%. This bank's situation is unique as it is in its first full year without an asset cap, potentially leading to more varied outcomes. Two strategies are also suggested for Wells Fargo:

• Twin Butterflies: This strategy targets a move close to the usual size in either direction, offering a cost-effective way to profit from expected volatility.
• Iron Condor: Similar to Goldman Sachs, this strategy is for those who believe Wells Fargo will move less than the priced expectation, allowing traders to collect premiums if the stock remains within a certain range.

Conclusion

The analysis of Goldman Sachs and Wells Fargo illustrates how the options market prices expected movements differently based on historical performance and current market conditions. Traders can utilize various strategies to express their views on these earnings reports, each with defined risks and potential rewards. The article emphasizes the importance of understanding these dynamics before making trading decisions.