Alphabet Stock Eyes Worst Day Since 2020 After Earnings

Options traders have been quick to the trigger this morning

Digital Content Manager
Oct 26, 2022 at 11:26 AM
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Alphabet Inc (NASDAQ:GOOGL) is down 6.4% at $97.84 this morning, after the tech behemoth's third-quarter earnings and revenue fell short of expectations. The company noted sales growth for its Google unit slowed down for the fifth-straight quarter, while ad revenue for its YouTube unit for the first time since it started sharing results.

This update is not sitting well with the brokerage bunch. At least 21 firms have cut their price targets on GOOGL, with J.P. Morgan Securities slashing its objective to $115 from $136. The equity's 12 month consensus target price of $133.29 is still a 37.6% premium to current levels, though.

Options traders have been quick to the trigger. So far, 299,000 calls and 178,000 puts have crossed the tape, or four times the average intraday volume. The weekly 11/4 100-strike call is leading the pack, followed by the 10/28 97-strike call, with positions being bought to open at both. 

It's worth noting the equity's Schaeffer's Volatility Scorecard (SVS) stands at an elevated 76 out of 100. This means GOOGL has exceeded option traders' volatility expectations during the last year, making now an opportune time to speculate with options.

Digging deeper, the 50-day moving average and $105 area rejected Alphabet stock's pre-earnings rally. The equity is today looking to snap a four-day win streak, as is eyes its worst single-day percentage loss since March 2020. Year-to-date, GOOGL carries a 33.4% deficit.


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