Alphabet Inc (GOOGL) Optimism Runs Deep Ahead of Smartphone Event

Alphabet Inc (GOOGL) has sent invitations for an early October event in which it may reveal new smartphones

by Alex Eppstein

Published on Sep 20, 2016 at 10:09 AM

Last night, Alphabet Inc (NASDAQ:GOOGL) sent invitations for an event on Tuesday, Oct. 4, in San Francisco, where the company is expected to unveil a new line of Pixel smartphones -- a likely rival to Apple Inc.'s (NASDAQ:AAPL) iPhone 7. Details on the Google Home smart speaker could also take place during the event. The news has the tech stock modestly higher, and recent activity in the options arena suggests traders may be hungry for more gains.

Specifically, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.59 GOOGL calls for each put over the past 50 sessions. What's more, the stock's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) checks in at 0.55, with near-the-money calls in the front three-months' series nearly doubling puts.

It's an ideal time to pounce on short-term GOOGL options, too. The stock's Schaeffer's Volatility Index (SVI) sits at an annual low of 16%, suggesting premium is pricing in historically low volatility expectations at the moment.

Optimism toward GOOGL runs even deeper
than the options pits, too. For example, 27 of 29 analysts rate the shares a "buy" or better, with not a single "sell" opinion to be found. What's more, a nearly negligible 0.4% of the stock's float is sold short.

On the charts, GOOGL has been consolidating near last month's record high of $813.88, last seen 0.8% higher at $801.80. Relative to its most recent low of $672.66 from late June, however, the shares have been positively explosive in recent months. On a relative-strength basis, the stock has outperformed the broader S&P 500 Index (SPX) by 10.6 percentage points during the last three months.

Obviously, if Alphabet Inc's (NASDAQ:GOOGL) Oct. 4 event impresses, it should continue to trek higher. In other recent news, the stock is shrugging off a potential $400 million tax bill in Indonesia, where the government has accused the company's local office of tax avoidance.

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