Google Inc. (GOOGL) Traders Gamble On an Earnings Flop

Google Inc (GOOGL) will report fourth-quarter results after the bell

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Published on Jan 29, 2015 at 10:49 AM
Updated on Apr 20, 2015 at 5:32 PM

Google Inc (NASDAQ:GOOGL) is sitting 1.2% lower this morning, ahead of tonight's fourth-quarter earnings report. Meanwhile, traders are betting bearishly ahead of this event, with puts running at nearly twice the average intraday rate.

Diving into the details, the weekly 1/30 480-strike put -- GOOGL's most active option by a more than 2-to-1 margin -- is seeing some buy-to-open activity. These speculators are anticipating the shares will breach $480 by tomorrow's close (when the options expire), which would require a 5.2% from their current perch at $506.10. While this isn't out of the question, the options market is pricing in a less ambitious 4.2% post-earnings move, based on at-the-money straddle data.

Moving along, GOOGL isn't much to look at, technically speaking. Since topping out at $615.04 in late February, the shares have given back nearly 18%. Over the last few weeks, the stock has also run up against resistance at its descending 20-week moving average.

As alluded to, Google Inc (NASDAQ:GOOGL) will report quarterly results after the close, and analysts are expecting a per-share profit of $7.11 -- a more than $1 improvement over the company's year-ago result. In other news, GOOGL and VMware, Inc. (NYSE:VMW) announced a collaboration in the cloud enterprise space.

Weekly Chart of GOOGL since February 2014 with 20-Week Moving Average


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