GOLDMAN SACHS: These 20 stock options trades all provide return potential above 240% — and simply buying their shares offers price upside of at least 47%

• Goldman Sachs believes the S&P 500 will remain flat through 2023.
• For those with a higher risk appetite and shorter time horizon, call options can drive big returns.
• Goldman published a list of 20 stocks on Wednesday with attractive call option upsides. 

Goldman Sachs equity strategists see the S&P 500 staying flat at around 4,000 through 2023. 

So to drive positive returns, they recommend owning stocks linked to falling inflation, and stocks in defensive sectors like healthcare, consumer staples, and energy. 

For investors with a higher risk appetite, however, the bank’s derivative research team led by Vishal Vivek published a list of stocks in a note to clients on Wednesday with substantial call-option upside. A call option affords one the opportunity to buy a stock (in groups of 100 shares) at a later date at a set price. So, a call option on a stock with a $100 strike price, bought for a 10% premium of $10 per share, would cost $1,000. 

The list is made up of 20 buy-rated stocks that Goldman analysts believe have high appreciation potential — they all have Goldman price targets at least 47% higher than their current share prices. 

The call option upsides are also robust, with the highest being 658% and the lowest 248%. All of the call options are at-the-money, meaning their strike prices (the price investors have the right to buy the shares at) are very close to their current share prices. They recommend an expiration date on the contracts of January 2024.

Options can be exercised anytime before their expiration date. If the share price does not rise above the strike price plus the premium per share, the investor would lose the amount of the premium they paid. Once a share price rises above the strike price plus the premium per share, an investor’s return is positive, or “in-the-money.”

The 20 stocks — as well as their share price upsides and call option upsides — are listed below in descending order of their call option upsides.