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Don’t read this if you are not willing to lose 100% of investment in this speculative trade. Google in my opinion is still the king of earnings play. I covered Google extensively in several parts. For those who love fundamental analysis, here is the 3 part series.
I started with fundamental analysis and later I talked about 4 different type strategies. It may not suit to your “speculation style”. This is surely not an “investment” opportunity” rather a speculative one to benefit from the movement in the stock after earning announcement.
Generally speaking ATM IV is a good gauge of how much a stock can move. Based on current IV profile GOOG IV difference is over 20%. Now I don’t expect google to move over $100 after earnings, but I do want to speculate for a 10% move i.e. +/- $50. Based on current $550-$560 price that works out to be $610 or $510. When I combine that with Fib series, I get expected pin points at $610/$520/$510.
I want to play it as cheap as possible, as I am willing to lose all, so I shall be looking for opening butterflies at these points. We can discuss more here in the forum as well.
Again watch out- Don’t play this if you are not willing to lose 100%. This is extremely risky i.e. if google doesn’t pin at any of these points, you will lose all the money.
Have fun, Profitable trading, OP
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Has google ever moved 50- 60 points in all the earnings in the last one year? It barely moves 15-20 points. Besides its expiration Friday, and google usually gets pinned. We just have to see if its pinned or it moves. Please comment. It may not move at all, that is my guess.
In my opinion google will get pinned near 560 or 550 strikes. Signs of pinning should be evident starting wednesday. The open interest around those strikes is massive. If it gets pinned near a strike on Thursday morning , forget about any big moves. These market makers will buy and sell both sides to keep it near the strikes and it will be very hard for it to move on expiration day. You should designed strategies as a Buttrefly or mini condor at the strikes.
If the pin action is absent, it can run around and if they announce a 3:1 split like RIMM you could easily see 600 on the move in few days.
Dear XF, thanks for the comment. Google may or may not move 50 points and that’s why it a speculative trade. Taking this argument a step further, if it never happened doesn’t mean it will never happen or it can not happen. I agree that based on past observations this move is “falsified” but I am looking forward and I am looking for a move. I may be wrong but I am willing to take that chance with proper money management plans in place.
Cheers and profitable trading, OP
How do you set up the iron strategies (condor and fly)?
Thanks!