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Google Inc. - GOOG - cls: 616.00 chg: -4.11 stop: n/a

Company Description:
Named for the mathematical term "googol," Google operates websites at many international domains, with the most trafficked being Google.com. Google is widely recognized as the world's best search engine because it is fast, accurate and easy to use. The company also serves corporate clients, including advertisers, content publishers and site managers with cost-effective advertising and a wide range of revenue-generating search services. (source: company press release or website)

Why We Like It:
It's earnings season again and time to play the expected volatility that normally shows up in a post-GOOG earnings report. However, this time we're not suggesting a strangle play. We're going to list an aggressive, directional, and highly-speculative put play. Plus, we're listing a slightly less aggressive but still speculative put-spread play. The strangle section of the newsletter seemed like the best spot for it. GOOG is due to report earnings on October 18th, after the market's close. Wall Street expects the Internet titan to earn $3.77 a share. Given the recent run up odds are good that GOOG will see (yet again) a sell-the-news reaction. We have two days to open this position.

Strategy 1) Speculative put. If GOOG sells off $50 or $60 this could triple in value.

BUY PUT NOV 550 GOP-WY open interest=2128 current ask $7.00

Strategy 2) Put spread. Buy the higher-dollar put and sell the lower-dollar put to decrease our cost.

BUY PUT NOV 580 GOO-WP open interest=1795 current ask $14.10
-and-
SELL PUT NOV 530 GOP-WW open interest=1480 current ask $4.30

Based on these numbers our net cost should be about $9.80. If/when GOOG sells off we'll sell the $580 put and buy back the $530 put and pocket the difference.

Picked on October 16 at $616.00
Change since picked: + 0.00
Earnings Date 10/18/07 (confirmed)
Average Daily Volume = 4.3 million
 

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