DailyPlay – Opening Trade (GOOGL) – July 25, 2023

GOOGL Bullish Opening Trade Signal

View GOOGL Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 5 Contracts Sept 1st $121/$114 Put Vertical Spreads @ $3.05 Credit per contract.

Total Risk: This trade has a max risk of $1,975 (5 Contracts x $395) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $395 to select the # shares for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that has been neutral to bullish and is expected to continue higher.

1M/6M Trends: Neutral/Neutral

Technical Score: 9/10

OptionsPlay Score: 105

Stop Loss: @ $6.10 Debit (100% loss).

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Monday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

As we wait for HLT to report Wednesday morning and TMUS on Thursday afternoon, we look for opportunities among the Tech giants that report this week. Across the board, all the major tech names that lead this AI rally are trading at nosebleed valuations, except Alphabet. While still expecting over 16% EPS growth this year, GOOGL trades at only 22x next year’s earnings, presenting a long entry opportunity just before earnings. The risks lie in search revenue and communication of timelines for their AI integrations that could drive the stock performance after earnings. With options premiums elevated, we have a rare opportunity to sell a Bull Put Spread going into earnings collecting over 43% of the vertical width. Sell to Open the Sept 1 $121/$114 Put Vertical @ $3.05 Credit. With a hypothetical portfolio of $100,000 we recommend risking 2% of it on this trade, which is 5 Contracts for a total risk of $1,975 in. Set a stop loss on the spread when losses exceed 100% of the premium paid, about $6.10 Debit. 

GOOGL – Daily