Google (GOOG) rises after speaking out about wireless auction
Posted by: admin in Goog news
Filed under: Major movement, Good news, Google (GOOG), Options, Technical Analysis, Technology
Google Inc. (NASDAQ: GOOG) shares are trading higher after the company said in a blog post last night that it bid in the recent government spectrum auction in an effort to open up the airwaves to outside Internet devices. The company also said it planned on bidding in the next wireless spectrum auction in an effort to improve its own wireless business. GOOG is currently developing a mobile phone software platform, and hopes to “make the wireless world look much more like the open platform of the Internet,” according to a company statement. If you think that the stock won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on GOOG.
After hitting a one-year high of $747.24 in November, the stock hit a one-year low of $412.11 in March. GOOG opened this morning at $457.01. So far today the stock has hit a low of $456.20 and a high of $471.99. As of 12:45, GOOG is trading at $470.01, up $14.89 (3.2%). The chart for GOOG looks bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $400 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just two weeks as long as GOOG is above $400 at April expiration. Google would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
GOOG hasn’t been below $410 at all in the past year and has shown support around $440 recently. This trade could be risky if the company’s earnings (due out on 4/17) disappoint, but even if that happens, this position could be protected by the support the stock might find around $410, where it bottomed out last month.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in GOOG.
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