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Low Risk Google, Inc Option Play

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May 25, 2012 – Comments (0) | RELATED TICKERS: GOOGL

Google, Inc. Credit Spread (NasdaqGS: GOOG)

 

TheOptionPlayer.com recommends a Google (GOOG) short-term (7-day) bullish option strategy. Investors could simultaneously:

Sell the June week-one expiration GOOG $570 put for $2.70

AND

Buy the June week-one expiration $565 put at $2.03

The difference between funds received and paid out is a .67 credit which we keep if Google closes above $570 on June 1st, but immediately exit the position if it appears the price will end up lower. See Guidelines page at www.theoptionplayer.com/ for explanation on how trade is set up.

 

Why we recommend it:

(NasdaqGS:GOOG ) though the overall stock market has drifted down the past three weeks, Google's price held up well and did not crash with the rest of the technology stocks. The main reason for Google's resilience is the company enjoyed a great month of May due to favorable legal and business news. As confirmed in the daily chart, Google shares basically have consolidated in a relatively tight trading range over the past month. Every time Google's stock price dips even little bit, buyers take advantage of the opportunity to acquire shares (which push the price back up.) At the very least there is a high probability that the price will remain above the $570 target for another week as it has not been that low since February.

 

52-Week High: $670.25

52-Week Low: $473.02

Average Volume (3 month):   2,566,400

 

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