2nd Trade Update June 13th, 10:40am: Google is now a bit lower than where I closed half of this position last week (below), now I am going to sell the other half at 19.50, for nearly a double of the 10.00 I paid for the July 580/535 Put Spread. This seems like a healthy profit for a stock that has quickly approached a technical support level. I will look for a better entry point to re-short on a rally prior to Q2 earnings in mid July.
Action: Sold 2nd half of the structure at 19.50, for an 9.00 profit, (stock ref $562.50).
Trade Update June 5th, 2:05pm
With Google trading 568 I’m going to take half of this July trade off for an 8 dollar profit. This will book some profits and allow the structure to only be risking a few dollars. I’ll let that second half ride in case of a big move lower. Any big move lower can reap alot of profits on the balance due to the width of the strikes in the structure. But with the price of the structure as is, I want to adjust my risk reward in case of a move higher in the stock. I also closed the June version of this spread for a profit last week.
Action: Sold half of the structure at 18.10, for an 8.10 profit, leaves balance (stock ref $568).
Trade Update May 21st, 2012 at 10:30am: On Friday When I posted on the GOOG June 585/565 put spread (below), I mentioned that I was going to do this smaller than usual. Now with July options listed, which should catch Q2 earnings, I bought a July put spread as I suggested I would on Friday. Because my entry point was so good on Friday in June I will keep this and trade it if the stock breaks $600 soon and keep July put spread for the big expected break lower following earnings.
TRADE: GOOG ($612) Bought the July 580 / 535 Put Spread for 10.50
-Bought 1 July 580 Put for 20.00
-Sold 1 July 535 Put at 9.50
Break-even on July Expiration:
Profits btwn 569.50 and and 535 make up to 34.50, max gain of 34.50 below 535.
Losses of up to 10.50 btwn 569.50 and 580 and max loss of 10.50 at 580 or above
Original Post May 18th, 2012: New Trade GOOG: The Great GOOGly Moogly
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: