Google Inc (GOOGL) Rally Breeds Confidence Among Traders

Google Inc saw a mix of put selling and call buying on Monday


Published on Dec 23, 2014 at 10:35 AM
Updated on Apr 20, 2015 at 5:32 PM

Google Inc (NASDAQ:GOOGL) popped 2.4% yesterday to land at $532.30, after the firm unveiled the first real build of its self-driving vehicle prototype. The rally had options traders exchanging contracts at a slightly accelerated rate, with short-term strikes in demand -- per the stock's 30-day at-the-money implied volatility, which rose 6.3% to 24.5%.

Speculators employed different strategies to express their confidence in GOOGL. The most active option was the January 2015 500-strike put, which was sold to open, as traders expect the half-millennium mark to serve as support through front-month options expiration. This preference for short puts over long has been witnessed over the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where 32,676 puts have been sold to open -- outstripping the 31,369 bought to open.

Meanwhile, shorter-term bettors bought to open GOOGL calls, with particular attention being paid to the weekly 12/26 535 strike. These traders are hoping the stock settles above $535 at this Friday's close, when the series expires. They're in luck, with the shares up 0.9% this morning at $536.80.

Longer term, however, Google Inc (NASDAQ:GOOGL) remains a broad-market laggard. Since the start of 2014, the stock is down 4.3%, and is currently testing a historical level of resistance at its 32-day moving average.

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