It’s plausible that the US won’t know who their next president is on Nov. 5 or the days to come, per Goldman Sachs

It’s plausible that the US won’t know who their next president is on Nov. 5 or the days to come, per Goldman Sachs, $GS.

It's entirely plausible that Americans might not know who their next president is on November 5 or in the days following, considering President Joe Biden and former President Donald Trump are roughly even in national polls. A prolonged decision could lead to a surge in market volatility that investors aren’t pricing in, according to David Kostin, the bank’s chief US equity strategist.

“I think there’s going to be some recounts,” Kostin said at the Goldman Sachs RIA Professional Investor Forum in New York on Thursday.

Last Friday, Goldman strategists led by Kostin said in a note to clients that while many investors believe it’s too early to position for election outcomes, a close election has its own risks that volatility markets, based on the VIX futures curve, aren’t considering.

S&P 500 Index options are showing little evidence of outsized positioning around the election. At-the-money implied volatility for contracts expiring on November 15 is less than a percentage point above mid-October options, showing little change from a month ago.

While the VIX futures curve shows a premium for October contracts, which are based on S&P options after the election, this has remained steady over the past couple of months since the contract started trading.

Goldman advised clients who believe an election winner won’t be decided for more than 15 days to consider owning November VIX contracts, which represent implied volatility through mid-December and trade below October contracts.