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Home › Forums › Swing Trades › Target Trade in GOOGL
I’m going to add a little complexity in this trade — even though I think GOOGL does trade higher, it did just have a massive move on earnings and could potentially be overbought.
This is a classic post earnings “pop drop and chop” pattern. The stock had a good run for a few days after earnings, then it had giveback as profit takers came in… but 650 is acting as a good floor. 650 is also a logical retracement level based off the earnings gap.
Odds are that going into August expiration, GOOGL will trade higher, break above 670 and then run a little more. I don’t expect it to break to new all time highs, at least not yet, so I’m willing to cap my upside.
Here’s the trade:
Buy to Open GOOGL Aug 670/690/710 Call Butterfly @3.80 or lower.
This butterfly spread makes a really nice low-risk play for some upside in the stock.
The current mid price is 3.65 but the spreads are wide so you may need to walk the order up to 3.80.
Assume full risk on the trade. This is profitabel as long as GOOGL trades between about 670 and 705 into Aug opex.
If you want to be more aggressive, you can just buy the Aug 670/690 bull call spread @6.00 and not have your upside capped.
Caught a gap up on the Alphabet restructuring so the trade is doing well… but don’t expect this to be a lotto ticket.
Option odds tell us that it’s about a coin flip that the price of GOOGL will be inside our breakevens going into expiration. I’d rather take the money and run here.
Sell to close GOOGL Aug 670/690/710 Call Butterfly @6.50 or higher.
Return on max risk: 71%