Cramer on Goldman Sachs (GS) and deal-making outlook

After hitting a one-year high of $233.97 in May, GS shares fell sharply in July and August before rebounding off support around $163 in mid-August. GS opened at $176.18 and has hit a low of $176.18 and a high of $180.72 so far. As of 11:00, GS is trading at $179.94, up $3.93 (2.2%). The chart for GS looks bearish but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

If you agree with Cramer, then for a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $140 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 7 weeks as long as GS is above $140 at October expiration. Goldman Sachs would have to fall by more than 22% before we would start to lose money

GS hasn't been below $140 at all in the past year and has shown support around $170 recently. This trade could be risky if the financial crunch continues or the Fed does not lower rates this month, but even if that happens, this position could be protected by support around $165, where it bounced in August.

Brent Archer is an options analyst and writer at Investors Observer.