Option Investor
New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None None GOOG

Play Editor's Note: The market's strength today was great to see but we don't want to chase it here. There are a number of stocks that we do want to watch for potential entry points. We continue to watch FCX and PCU. Both made pretty big gains today. Both continue to look bullish. MMM is back to challenging resistance. A move over $81.50-81.75 might be a play. Steel and iron stocks are hot and NUE looks like it's trying to breakout from its sideways consolidation. Natural gas is breaking out and the UNG just closed over resistance near $50.00. DE just broke through resistance near $90.00. CHL is breaking out from its two-week trading range.


New Calls

None today.
 

New Puts

None today.
 

New Strangles

Google Inc. - GOOG - cls: 455.03 chg: +8.19 stop: n/a

Company Description:
The planet's number one Internet search engine.

Why We Like It:
GOOG has always been a momentum stock but it's also become a bellwether for the tech sector. There are a lot of expectations for the company's earnings reports every quarter. Sometimes playing a strangle over the earnings announcement works like a charm and sometimes it doesn't. We hesitated to add GOOG as a strangle tonight because the options always look so expensive. However, odds are pretty good that GOOG will see another massive move on its report. We're looking for a greater than 10% move. It may not be all on Friday but within three days of the earnings announcement. GOOG reports after the bell on Thursday and Wall Street expects a profit of $4.52 a share. Tomorrow is our only day to open strangle positions ahead of earnings.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money put. You don't have to choose the same strikes or the same month we do. The estimate cost for our May option strangle is $14.10. We want to sell if either option hits $25.00 or more.

BUY CALL MAY $500 GOP-EO open interest=8154 current ask $7.90
-and-
BUY PUT MAY $400 GOP-QT open interest=2594 current ask $6.20

FYI: You could try the same strangle with the April $500 call and April $400 put and it would cost you about $3.00 instead of $14.00 but you'd only get one day (Friday, April 18th) as April options expire. Probably not a good bet. You'd be better off and have more fun in Vegas.

Picked on April 16 at $455.03
Change since picked: + 0.00
Earnings Date 04/17/08 (confirmed)
Average Daily Volume = 2.9 million
 

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