Google, Inc. (GOOG) Technical Play Ahead of Earnings
Google.com, Inc. Credit Spread (Nasdaq: GOOG)
TheOptionPlayer.com sets up a Google.com (GOOG) short-term (4-day) option strategy. Investors could simultaneously:
Sell the January week-four expiration GOOG $1175 call for $2.30 (Friday's closing bid/ask mean)
Buy the $1180 call at $1.68 (Friday's closing bid/ask mean)
The difference between funds received and paid out is a $.62 per share credit which we keep if Google.com stock closes below $1175 on Friday January 24th, 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 playing Google.com (NasdaqGS: GOOG) stock to continue trading below its current resistance level until earnings announcement at the end of the month. As noted in the Google.com 2-hour chart below, after breaking through the previous short term resistance at the end of last week, the price has been contained between current resistance and support (defined as previous resistance). Looking at the daily chart you can easily observe that even though Google traded at a 52-week high last week, the price is stuck in a trading range with momentum indicators flashing neutral signs. Unless there is some unexpected news it is reasonable to expect the stock price to remain subdued until Google.com reports earnings at the end of the month. At the very least there is a high probability that shares will continue to trade below the $1175 target for a few more days.
52-Week High: $1160.63
52-Week Low: $695.52
Average Volume (3 month): 1,866,500
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