Google (GOOG) 11/20/09 PriceWatch Alert Bullish Price Movement

Posted: Friday, November 20, 2009 8:08 AM EDT
By: Market Intelligence Center Staff

Google (NasdaqNM: GOOG) closed yesterday at $572.99. So far the stock has hit a 52-week low of $247.30 and 52-week high of $578.78. Google stock has been showing support around 568.33 and resistance in the 576.33 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 '10 640 covered call (GOQ AH) for a net debit in the $570.49 area. That is also the break even stock price for this trade. This covered call has a 57 day duration, provides 0.44% downside protection and a 12.18% assigned return rate for a 78.02% 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 '11 420 Call (OUP AG) and selling the Jan '10 640 call (GOQ AH) for a $173.50 debit. The trade has a 57 day life and would provide no downside protection and a 26.80% assigned return rate for a 172.00% annualized return rate (for comparison purposes only). Google does not pay dividends at this time. [FBB-Seven Summits Research]