Google (GOOG) 11/6/09 PriceWatch Alert Technicals Showing Bullish

Posted: Friday, November 06, 2009 8:07 AM EDT

Google (NasdaqNM: GOOG) closed yesterday at $548.65. So far the stock has hit a 52-week low of $247.30 and 52-week high of $561.64. Google stock has been showing support around 539.92 and resistance in the 554.14 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 Jan '10 610 covered call (GOP AE) for a net debit in the $543.45 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 0.95% downside protection and a 12.25% assigned return rate for a 62.95% 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 '11 380 Call (OZF AZ) and selling the Jan '10 610 call (GOP AE) for an $184.25 debit. The trade has a 71 day life and would provide no downside protection and a 24.83% assigned return rate for a 128.00% annualized return rate (for comparison purposes only). Google does not pay dividends at this time. [FBB-Seven Summits Research]

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