I have tracked Google’s options activity this whole week, to find out who’s winning this tug of war, bears or bulls.
Peaked around 945am chicago time. Closed around the day lows @ 539. Trade rance of 537-545.5 8.5pts. (1.57%)
Monday Options activity:
Volume for 10 closes strike prices:
call volume: 30,539
Put volume: 15,884
Call/Put Ratio: 1.922 (very bullish ratio)
peaks around 1105am chicago time @ 546. Lows around 2pm chicago time @ 548 closes on a nice 3pt run the last hour to get to 541.39 trade rance 538-546 8pt range (1.47% trade range)
Volume for 10 closest strike prices:
Call volume: 27,727
Put volume: 15,012
Call/put ratio: 1.847 (very bullish)
Peaked @ 547 @10am chicago time and again @ 115pm chicago time. Bottomed @ 543 @ 1015am and at the close finishes right at day low. Trade range 542.5-547: 4.5pt trade range (very small .82%)
Volume of 10 closest strike prices:
call volume: 27,721
put volume: 16,897
Call/Put ratio: 1.64
Conclusion and predictions:
Google’s earnings are released after the bell on Thursday. A couple of things to note.
-The street has gotten less bullish on Google each day this week leading into the close
- Monday Ratio 1.922
- Tuesday Ratio 1.847
- Wednesday Ratio 1.64
-Historically Google averages a 4-4.5% move in the overall stock price. If this is average is correct for this google trade Then the stock is poised to trade somewhere between 520-570.
A couple of trading ideas for this google trade:
My prediction if earnings are good, which I believe they will be. I believe google could end up closing around 600. There are a number of ways to play this move you can buy any of the out of the money upside calls.
|strike price||cost||if hits 570||580||590||600|
The last 2 earnings releases for Google have been negative:
April 15th 2010 Close @595
April 16th 2010 Close @ 550
result -45pts or -7.5%
July 15th 2010 close: 494
July 16th 2010 close: 459
result -45pts or -9.1%
Jan. 21 2010 close: 582
Jan. 22 2010 close: 550
result -30pts or 5.4%
If the stock trades down this is what it would look like:
There are ways to play both sides of this trade, since it seems like no one really knows where this stock is going to head post earnings.
You can trade a straddle:
the straddle is pricing in a move of $23. So to break even on this trade you would need goog to hit either 565 or 520
Im looking at a 530/560 straddle:
buy 10 530 puts @ 3
buy 10 560 calls @ 5
this means my break even point is 522 and 568. There is support @ 510 which is where I think it will end up if the stock goes down. This will be a net profit of 12 units. If the stock goes up there is resistance at 560 and 580. I wouldn’t be surprised if it trades in this range all day on good earnings.