Options Trading News

February 5, 2013  Tue 12:21 PM CT

At least one trader apparently believes that Google will keep going after a big rally in the last year.

optionMONSTER's Heat Seeker tracking program detected a large bullish trade in the search giant, entailing the purchase of 1,000 January 2014 800 calls for $56.50 and the sale of an equal number of January 2014 900 calls for $23. That translates into a cost of $33.50.

The trade represents a $3.35 million bet that GOOG will reach $900 by early next year. If it does, the position will be worth $10 million--a profit of 199 percent. This strategy, know as a call vertical spread, risks much less capital than buying shares at current levels. (See our Education section)

GOOG is trading at $768.61 this afternoon, up 1.26 percent on the session and 29 percent in the last year. While its financial results have been mixed, investors continue to applaud its dominant online position and are hoping for better profit margins.

The shares are also attempting to push convincingly through their late-2007 peak of $747. Some chart watchers may expect a continued rally if this resistance level is broken.

Total option volume in the name so far today is already double its full-session average, with calls outnumbering puts by almost 2 to 1.
Share this article with your friends

Invest Like a Monster - San Antonio: October 9-10


The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »