Google, Inc. Credit Spread (NasdaqGS: GOOG)
TheOptionPlayer.com recommends a Google (GOOG) short-term (one week) option strategy. Investors could simultaneously:
Sell the July option expiration GOOG $620 call for $3.70 (yesterday's closing price)
Buy the July expiration $625 call at $3.00 (yesterday's close)
The difference between funds received and paid out is a .70 credit which we keep if Google closes below $620 on July 20th, but immediately exit the position if it appears the price will end up higher. See Guidelines page at www.theoptionplayer.com/ for explanation on how trade is set up.
Why we recommend it:
We published a similar Google, Inc. trade last week that was profitable. As indicated in the daily chart below (NasdaqGS:GOOG ) stock price has been flat since falling from mid-May market highs. Google stock has been floating along with tech shares despite a lot of negative press lately. Recent bad news announced this week includes 'another' patent infringement lawsuit plus the fact that gmail was included with the other major ISP's that were penetrated by hackers who posted usernames and passwords online. The recent rash of dour headlines appears to have put a cap on any rise in Google stock price and has investors concerned about growth prospects when it announces earnings on July 19th.
Google stock is well below the target price and has not been near that level since the stock market was at its mid-May high point. At the very least there is a high probability that the price will remain below the $620 target for another week.
52-Week High: $670.25
52-Week Low: $480.60
Average Volume (3 month): 2,593,750