Leave a Little Downside Teaser – Google Options Trade

So do you think the DSK bottom is in? Or maybe the Libya bottom? It may be. I am not convinced yet though. But even if you are then how about a no cost downside kicker? Better yet, get paid to trade it. Take a look at the chart for Google (ticker: $GOOG) below. A nice solid bounce off of 490 and now back over 515. Notice there is also support lower at 473, 450 and 440. A move lower to 450 from here is a drop of over 14%.

So if you like the market to move higher here then why not take a trade you get paid for, just in case you are wrong? The options market offers this for $GOOG by using a 1×2 Put Ratio Spread.

Trade: Buy 1 $GOOG Sep 515 Strike Put and sell 1 September 510 Strike Put and 1 September 450 Strike Put, for $1.70 Credit.

It is a win-win scenario. If the stock continues to rise you keep the $1.70. if it falls to 510 by September expiry you make an additional $5. And you are protected to a price of 443.30, nearly 15% below where it is currently trading. Not a bad place to won it if you like the market right now. This trade will take margin but you were all cash anyway right?

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog