Search engine and tech giant Google (GOOGL) is now up less than 5% over the past year, following the recent market weakness. One trader sees shares making up for lost ground and rallying over the summer.
That’s based on the October $215 calls. With 184 days until expiration, 14,133 contracts traded compared to a prior open interest of 282, for a 50-fold rise in volume on the trade. The buyer of the calls paid $1.56 to make the bullish bet.
Google shares recently traded for about $160, so shares would need to rise by $55, or about 34%. The strike price is just over Google’s 52-week high of $207.05.
While the share price has been lackluster over the past year, revenues are up 12%, and Google sports a hefty 29% profit margin. The company has been late into the AI space, but is working on new AI tools that could allow it to continue dominating in the search space.
Action to take: Shares are still oversold, and are likely to trend higher in the months ahead. And Google is one of the better-valued Magnificent Seven plays today, trading at less than 18 times forward earnings.
Today’s buyers can also get a 0.5% dividend.
For traders, the October $215 calls are well positioned for a strong rally over the summer. The options are priced low enough that they could deliver high double-digit returns before expiration.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.