We’d like to welcome Andrew Keene to our community. Andrew has been
GOOG closed today at $539.00, off $18.23.
The Trade: I bought the Google (GOOG) September 580-600 call spread and sold the GOOG September 520-510 put spread for even money.
Profitable – I make money on this trade if GOOG closes on September 16th above $580 (with a maximum potential gain of $20).
Breakeven – If GOOG ends up closing between $520 and $580, this trade breaks even.
Unprofitable – If Google closes under $510, I will lose the maximum amount/the value of the put spread ($10).
The reason I like this trade: Due to investor concerns about yesterday’s acquisition of Motorola Mobility, Google’s stock has been hit hard — too hard in my estimation. The stock is now trading at the level it was prior to last quarter’s blowout results, giving back $90 per share (~17%) in stock value. The goal with this trade is to get long GOOG stock with limited capital. If the stock trades back above the $580 level, I make money.
Andrew R. Keene