Stock / Symbol: [private_monthly]Google / GOOG
Price at trade post: $625.93
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Option Strategy: bear call spread
Max Risk: $780
Max Reward: $220 or 28% by Feb 2011 expiration
Profit Range: $0 - $662.60
Reasoning: [private_monthly]GOOG[/private_monthly] Is announcing earnings after market today and we're going to take advantage of the increased options volatility coming into earnings. Stocks are currently priced to perfection and even in cases where earnings were stellar, we're seeing most stocks pull back after announcing earnings. Even if we're wrong about the direction, this stock can move 35 points higher and we'll still be profitable on this trade. If we get a big enough move down following earnings, we'll look to immediately lock in a profit.
Trade Details:
[private_monthly]
Sell -1 GOOG Feb11 660 Call @ $10.00 for ($1,000.00)
Buy 1 GOOG Feb11 670 Call @ $7.80 for $780.00
Requirements
Cost/Proceeds ($220.00)
Option Requirement $1,000.00
Total Requirements $780.00
Estimated Commission $12.95
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Chart:
[private_monthly]
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