Amazon and ERTS are announcing earnings result tonight. A huge swing is expected in AMZN and little less in ERTS. So keep your backspread readys to do a paper trade to understand better how it works.

Cheers and profitable trading, OptionPundit

Here are the results of the 4 trades I placed to benefit from the google earning event:

• Here is the first trade that I opened on Jan 29^th with a Bull Put credit spread strategy. I sold for $4.05 and bot it back for $3.40, before market close. This resulted in 10% profit.  
• 2^nd trade was based on what OP reader Avi had suggested here. My credit was $3.24 and I bought it back for nearly $0. So I am able to keep all the credit received. The returns on margin are 6%.   
• Here is the 3^rd trade. Just before the market close the volatility was very high. I thought to take advantage of high IV and open an Iron Condor for which shorts were more then 10% beyond the closing price. I sold $570/580/440/430 Iron Condor for $1.40. I bought it back for $0.20. The returns are $1.20 on $8.80 margin i.e. 13.6%.   
• 4th trade i.e.backspread is currently losing money. Google is continuing to go down, currently it is $14 down. If it goes down by further $10 by Feb 16th, I will be making money on this trade as well.   
• Please note, all the above trades I experimented via paper-trade so as to learn and craft my strategies for furture events like this (Not necessarily only Google).   

  Profitable trading, OptionPundit 

While browsing web for quick analysis of Google’s result, I found this interesting blog. I am posting key notes from blogger “Yaser Anwar” who wrote in his blog at: http://equityinvestmentideas.blogspot.com/index.html

• Google reported net revenue growth of 20% in the Q to $2.23B (EPS $3.29, excluding $133 million tax benefits EPS is $3.18), higher than Street estimates in spite of approximately 200 basis points increase in traffic acquisition costs as a percent of revenue.
• Google’s incremental cash flow margin in the quarter was 60.8%, down 100 basis points from Q3. Lower gross margin also impacted operating margin, which came in at 47.6% vs 49.9% reported in Q3. R&D expense was slightly higher than Street estimate and was offset by lower sales & marketing spend. On a pro-forma basis, operating margin was 53.6% in Q4 vs. 55.3% last Q.
• However, Investors should expect margins to continue trending down as Google invests aggressively in new growth opportunities (international, video, media partnerships and mobile etc).
• GOOG’s 19%+ QoQ growth reflected a ~1700 bps spread over Yahoo!’s normalized 3% QoQ search growth rate compared to the average 1,400 bps spread historically seen in the 4Q as Google continues to drive superior monetization of its commanding search market share both domestically and internationally.
• Google-owned sites revenue was $1.98 billion, 80% YoY, representing 62% of gross revenues. Revenues from Google’s network of affiliate sites was $1.2 billion, 50% YoY representing 37% of gross revenues.
• International revenue was $1.41 billion, +93% YoY growth, which represented 44% of total revenues. US sales were also strong coming in at $1.8 billion, growing at a clip of 51% YoY. Management pointed to contributions from Australia, Latin America, Ireland, and Brazil. Furthermore, management explicitly indicated several times on the call that growth in the US remains solid.
• A year ago, consensus expectations for 07 revenues and EPS were $9.0B & $11.63. Since then they have risen to $10.8B & $13.92, while Google’s stock has risen only 15%.

Check out Yaser’s blog for more information at: http://equityinvestmentideas.blogspot.com/index.html