Google (GOOG) Technical Play
Google, Inc. Credit Spread (Nasdaq: GOOG)
TheOptionPlayer.com sets up a Netflix (GOOG) short-term (8-day) option strategy. Investors could simultaneously:
Sell the December week-three expiration GOOG $1095 call for $2.45 (yesterday's closing price)
Buy the $1100 call at $1.83 (yesterday's close)
The difference between funds received and paid out is a $.62 per share credit which we keep if Google stock closes below $1095 on Friday December 20th, but immediately exit the position if it appears the price will end up higher. Another suggestion is if the price gaps up open the trade using higher strike prices. See Guidelines page at www.theoptionplayer.com/ for explanation on how trade is set up.
Why we recommend it:
We are basically making a technical play on (NasdaqGS: GOOG) stock based primarily on recent price action. As noted in the chart below, when the stock has been overbought to the extreme level the past few months, the price tends to stabilize. The green circle in the chart highlights how Google shares were extremely overbought a few days ago and you can see the price is pulling back. The stock climbed to its 52-week high intraday on Tuesday, but closing prices have trended down ever since. Also, notice in the chart that today's closing price for Google stock is almost exactly where it was a week ago. We are betting on recent price behavior – in that similar to this past week Google stock trades below the $1095 target.
52-Week High: $1092.31
52-Week Low: $695.52
Average Volume (3 month): 1,810,290
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