Google (GOOG) PriceWatch Alert Down To $542.13 Break Even

Posted on Wednesday, July 09, 2008 8:07 AM

Google (NasdaqNM: GOOG) closed yesterday at $554.53. So far the stock has hit a 52-week low of $412.11 and 52-week high of $747.24. Google stock has been showing support around 534.72 and resistance in the 565.10 range. Technical indicators for the stock are Bullish and S&P gives GOOG a neutral 3 STAR (out of 5) hold rating. GOOG appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Sep '08 620 covered call (GOO ID) for a net debit in the $542.13 area. That is also the break even stock price for this trade. This covered call has a 73 day duration, provides 2.24% downside protection and a 14.36% assigned return rate for a 71.82% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the GOOG Jan '09 480 Call (OUP AV) and selling the Sep '08 620 call (GOO ID) for a $94.40 debit. The trade has a 73 day life and would provide no downside protection and a 48.31% assigned return rate for a 242.00% annualized return rate (for comparison purposes only). Google does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]