Search engine giant Google (GOOGL) has been trending higher in the past few weeks following a massive decline last year. One trader sees a further move higher in the weeks ahead.
That’s based on the April 28 $114 calls. With 21 days until expiration, 5,362 contracts traded compared to a prior open interest of 124, for a 43-fold rise in volume on the trade. The buyer of the calls paid $1.33 to make the bullish bet.
Shares recently traded for about $105, so they’d need to rise about $10, or about 9 percent, for the option to move in-the-money. That’s a steep move higher for shares, but Google does next report earnings the last week of April.
Google is down 25 percent over the past year, and earnings have slid by 34 percent. However, the company still leads in the online search engine space, and other services that makes for a solid market rebound play.
Action to take: Long-term investors may want to use a pullback under $100 to buy shares and can be patient in doing so.
For traders, the April calls could see mid-double-digit gains in the coming weeks, but the returns will likely come down to how the shares trade at following earnings. Traders who want more certainty about the trade may want to buy calls farther out following earnings later this month.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.