Trade Update May 29th, 2012 @ 2:50pm: Since buying the June 595/565 Put Spread for 6.50 when the stock was ~$616, the stock is down almost 4%. I am going to sell the June Put Spread and hold onto the July 585/535 Put Spread that I bought a few days after the June. With the stock at $591 I am selling the June PS for $10.00, locking in a 3.50 profit.
ACTION: Sold June 595/565 Put Spread at $10.00 to close (stock ref $591)
Original Post May 18th, 2012:
Here is a quick preview of what I will be discussing on Options Action tonight on CNBC at 5pm et:
GOOG has under-performed the Nasdaq all year since reporting Q4 earnings in mid-January. International revenues make up more than 50% of GOOG’s business, which of course has not been a benefit as the U.S. has outperformed over the last 6 months. GOOG also gets a direct impact hit to earnings from a stronger dollar, and that trend has been in place for about a month now. In the shorter term:
Three Reasons to Short Near term:
1. Investors may swap out of GOOG for FB
2. Technically a test of 600 would likely see a break to the previous lows in Jan (chart attached)
3. Monetization of Mobile search going to be come an increasing focus as investment banks launch coverage of FB in the coming weeks.
Volatility: Average implied vol is not that high, so probably a good time to put something on. The skew is heavily to the downside so doing a put spread takes advantage of vol going higher the lower you go in strikes: