(This story is for CNBC PRO subscribers only.) Traders looking for an edge during the upcoming earnings season should bet on stronger-than-expected results from Amazon , Netflix and Boeing through the options market, according to a Goldman Sachs strategist. John Marshall, an equity derivatives strategist at the bank, said in a note to clients the options market is pricing in a 7.1% move for Amazon when it reports earnings on April 23, well above the eight-quarter average move of 3.7%. In other words, options traders are pricing in a rally, or decline, of more than 7% once Amazon releases its results. The implied earnings-day volatility for Netflix is also 7.1% while Boeing options are pricing in a 21.7% swing. Netflix is scheduled to report earnings on April 21. Boeing's results are set for release on April 22. The implied volatility priced into these stocks on earnings day represents significant risk for traders and investors. However, Marshall thinks buying call options ahead of these companies' earnings could be profitable since they have considerable "upside to estimates." Amazon's upside comes from its leading position in the e-commerce space, which is "being demonstrated in real time in the current crisis," Marshall said. Amazon orders have surged during the coronavirus pandemic as governments around the world push people to stay at home. The company is also benefiting from its cloud business, Amazon Web Services, as more people adopt cloud computing to work from home. Amazon shares are up more than 15% year to date while the S & P 500 has dropped about 15% in 2020. Netflix is another stock getting a boost from the pandemic as consumers stream more content from home. The video streaming giant is up more than 21% in 2020 and hit a 52-week high on Monday. "Netflix's content investments, distribution partnerships and global positioning should drive subscriber growth significantly above consensus expectations," Marshall said. As for Boeing, the stock is trading at attractive levels after losing more than half of its value this year, Marshall said. He added the bank's aerospace and defense analyst, Noah Poponak, thinks travel by flight will be "as popular as ever" once the crisis is resolved. Other stocks with significant earnings upside are Walmart , Zynga and Allstate , said Marshall. To be sure, the high levels of implied earnings-day volatility may be a byproduct of the uncertainty around corporate profits. Several companies have slashed their earnings guidance while some have suspended their forecasts. "Option markets are pricing an unprecedented 13.3% implied earnings-day move for the average stock in the S & P 500 this quarter," Marshall said. "This suggests investors today perceive a greater amount of uncertainty than ahead of any earnings season in the past 24 years of our data."
Traders looking for an edge during the upcoming earnings season should bet on stronger-than-expected results from Amazon, Netflix and Boeing through the options market, according to a Goldman Sachs strategist.
