GOOGL Analysis

Alphabet Inc. (GOOGL)

GOOGL publishes earnings on Thursday after the closing bell.

I shall use the MAR series of options, which trades for the last time 50 days hence, on March 17.

Implied volatility stands at 25%, which is 2.2 times the VIX, a measure of the volatility of the S&P 500 index.

GOOGL’s IV stands in the 51st percentile of its annual range and the 86th percentile of its most recent broad movement.

The price used for analysis was $852.40.

Premium: $41.50 MAR iron fly
GOOGL   Odds Delta
Calls
Long 920.00 85.8% 16
Break-even 891.50
Short 850.00 49.5% 54
Puts
Short 850.00 50.6% 46
Break-even 808.50
Long 780.00 83.8% 14

The premium is 59% of the width of the position’s wings.

The risk/reward ratio is 0.7:1.

Decision for My Account

This is an excellent trade, but I’m passing on it. It simply commits more to a single trade that I like.

My goal for a trade is generally around $500 in risk. As my funds grow, that will grow, but that’s where I am now.

GOOGL is an $850 stock, per share. Since an options contract is 100 shares minimum, that’s a lot of money on the table. The risk for the trade described about is about $4,000.

Love the trade, but it’s too risk for my blood. Hey, Alphabet! Time for a stock split?

By Tim Bovee, Portland, Oregon, Jan. 26, 2017

One thought on “GOOGL Analysis

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