Saturday, October 7th, 2017

How to buy GOOGLE cheap- Trade

The market dropped beyond October lows in a horrendous plunge down to the depths never seen since 2001. The plunge was brutal and insane and reminded experienced traders how not take anything for granted. I was on the sidelines watching and seeing great stocks getting decimated. One of the great stock was Google which traded down to 280 and it was a moment that seemed ridiculous enough. A worldwide company with best looking fundamentals on the books and this indignity..

But soon the market rallied hard from the lows and ended up 550 points up at the close. Google vaulted 21 points to 310 well above the round number 300 which it broke a day earlier. Based on this market action, and the bullish move -here is the trade we made today on GOOGLE. This is how you can buy Google on the cheap or may not be able to.

SELL 5 DEC GOOG 250 PUTS @ 6.70 = $3,350 Net credit to the accounts
Delta -6.7 Theta = $ 60.53 /day
Probability = 84%

GOOG has to drop 62 points before December to create any damage.Well than again we’ll be buying GOOGLE at $ 250- $6.70= $ 243.30. That may be a great bargain if we get the stock assigned! So we sold naked puts and if you would say we have unlimited losses, that is not correct. I would love to own GOOGLE at 243.30 and while I wait for that to happen, I need to get paid for waiting, because I am very choosy, and I buy only the best companies, with top notch fundamentals.

Should things do not work out as we imagined or if I change my mind, or if GOOGLE drops below 300 in a nasty sell off, I can always buyback these puts not more than 50% of what I paid for and call it a day. You can exit the trade and still wait for another opportunity come your way, but I doubt GOOGLE will get that low again before December 2008. Just remember, you are collecting almost $60.53 daily if GOOGLE just stayed where it is now, twisting and turning with the market and that amount is collected by you when you buyback those puts and exit the trade.


3 Responses to “How to buy GOOGLE cheap- Trade”
  1. Great Read, thanks for the post.


Check out what others are saying about this post...
  1. […] the rest of this great post here […]

  2. […] shorted GOOGLE 250 puts  back on November 13, 2008 . Today taking advantage of time decay and stock movement- closed the trade.  Google is up today at […]

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!