been keeping a close eye on it. We've raised our risk level on most of the
massively expensive tech stocks due to our views on the overinflated prices
from the "Trump Trade" since the election. Already, our speculation of the
market correction seems to be in-effect dependent on the next few days'
price action with the S&P 500 ( SPY ).
But in the meantime, we think the short term outlook for Google is ,
and this evinced itself when it continued its uptrend with the break of the
last up-fractal at $836.26 on Friday, March 9th . Although the option
liquidity is not our most favorite spread width, we saw a recent catalyst
occur as well with the introduction of Gmail money which will likely crush
the likes of Venmo and potentially Paypal.
Not to mention, Alphabet's subsidiary Waymo filed suit against Uber for stealing trade secrets through one of Uber's recently acquired autonomous car companies "Otto". After reading the details of what the suit entails, it revolves around a former Google employee stealing designs of proprietary LIDAR technology and using it for his autonomous truck startup (which Uber acquired). The lawsuit will likely be a hefty sum, and due to the somewhat "smoking gun" Alphabet has from email traffic showing the design in question, the odds favor Alphabet in winning the proprietary suit down the road.
From a fundamental standpoint, the Google news about the Gmail money concept will likely drive upward sentiment to execute a further uptrend following strategy. So how are we getting this at a discount?
Here's the trade:
Buy 3x Puts; 7 Apr 17 Exp ; $845 Strike $10.04
Sell 6x Puts; 7 Apr 17; $850 Strike $12.37
Buy 3x Puts; 7 Apr 17; $852.50 Strike $13.85
Max Risk: $495.00
Max Sweet-Spot Reward: ~$855.00
Max Reward Passed $852.50 Strike: $255.00
Our trailing stop will follow our middle moving average currently at $825.14
and moving upward.