Officials in the EU have accused Google of placing links for products on its own shopping service above those of it competitors. Officials state that this essentially amounts to abuse of the firm’s market share to give them an unfair advantage over its competitors. The main complaint that officials have is that if Google is purposefully pushing its own results higher search results may not best represent what customers are looking for.
Despite the actions taken by the EU shares of GOOGL are trading higher today. Google Inc (GOOGL) stock is currently trading around $542.00 in a 52 week range of $490.91-$608.91. GOOGL has been relatively sideways this year with shares higher by only 2% on the year. The next quarterly earnings release on April 23rd may provide a catalyst for the stock as it is historically strong on earnings.
GOOGL has rallied 5 of the past 8 quarters with an average move of 4.9%. This time around market makers are implying a move of around $23.00 by next Friday’s close indicating an expected move of 4.2%. If a trader expected GOOGL to rally on earnings how could they trade it? Typically we opt for spreads ahead of earnings as that helps shield the position from the expected drop in implied vol after the event. Using the implied move we can calculate an expected upside target of $565.00 by expiration and then structure a trade around it.
Trade: Buying the GOOGL Apr 24th weekly 555-565-575 Call Fly for $1.10
Risk: $110 per 1 lot
Reward: $1890 per 1 lot
Breakeven: $556.10 and $573.90
This trade profits in a wide range and gives a trader a huge reward to risk setup.