Put Volume Picks Up On Alphabet Stock Amid Google Ads Turmoil

Alphabet Inc (NASDAQ:GOOGL) is on pace for its fourth straight loss as major businesses pull their ads from Google and YouTube

Mar 23, 2017 at 3:18 PM
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Alphabet Inc (NASDAQ:GOOGL) has come under fire in recent days, as major companies pull their ads from Google and YouTube amid concerns they'll appear alongside offensive or extremist content. In fact, GOOGL stock is on pace for its fourth straight down day and its first close below its 50-day moving average since December, last seen 1.3% lower at $838.84. In the meantime, put buying has been unusually popular in the options pits.

GOOGL Options Traders Turn Bearish

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows GOOGL's 10-day put/call volume ratio at 0.93. While this ratio is call-skewed on an absolute basis, it ranks just 2 percentage points from an annual high, meaning put buying has actually been much more popular than normal, relative to call buying. 

In today's trading, calls and puts are both changing hands at roughly double the expected intraday pace. The weekly 3/24 and 3/31 options series are both very popular. For instance, the most popular put option today is the weekly 3/24 830-strike put, and data from the ISE confirms buy-to-open action. As such, traders are betting on GOOGL stock falling even further before the close tomorrow, when the contracts expire. 

It's the perfect time to buy Alphabet options, too. This is according to the stock's Schaeffer's Volatility Index (SVI) of 14%, which represents an annual low. This reading tells us the options market is currently pricing unusually low volatility expectations into options that expire within the next three months. 

Analyst Sentiment Extremely Bullish on GOOGL Stock

It'll be interesting to see whether any of this apparent skepticism takes hold in the analyst community. At the moment, 26 brokerage firms are covering Alphabet Inc (NASDAQ:GOOGL), and all but two recommend buying the shares. Not only that, but the stock has an average 12-month price target of $987.88, representing a nearly 18% premium to current levels. Yet, while it would seem GOOGL shares run the risk of bearish attention if this weakness continues, they do sport a healthy 6% year-to-date lead. 

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