Why We Love Google (Trade Review)
If you read my blog post last week, Better Trade Setups While GOOGLing you will notice we talked about and reviewed GOOGL as a potential trade setup I liked. I knew based on how it was moving that I wanted to use an options strategy of selling premium in the weekly options. I wanted to sell premium in options that expired at the end of the week. Let’s review some of the key points that made me like this trade. Here is how I reviewed the markets and chose to place the trade …
Here is what the stock looked like when we reviewed the stock in the Shecantrade trading room and added this stock to the shortlist to look for our entry:
GOOGL is a stock that loves to trend, so following a stock like this on a long term time frame like a daily and weekly chart gives you a clear picture of what direction the stock is moving in. With GOOGL at all time highs around of $950-960 we looked at short-term resistance at those levels and looked for price to move sideways or slightly down over the next two or three days. The strategy we chose was to sell out of the money premium with the assumption that price would not move through the strike. Here is the stock during and after the trade:
As the chart shows, GOOGL continued to move sideways for the rest of the week. Even though the trend was still bullish, the stock appeared to be losing steam. Since call credit spreads are ideal trade set ups for stocks that have recently had a big move, the pop up from earnings that GOOGL saw the end of April coupled with the sideways move of the stock at the beginning of the week last week turned in to a correct trading assumption and a winning trade.
And the best part….this wasn’t the only trade we entered and exited for profit last week. For a trade recap of the trades we placed in the trading room and texting service watch this video:
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