Google stock (GOOG) has been unusually subdued over the last 3 to 4 weeks which could mean it is ready to make a big move.
Google Inc. (GOOG) is a stock that is generally pretty volatile and has a history of making big moves in a short period of time. Since May 8th, Google stock has traded in a very narrow 19 point range between 525 and 544.
Looking at the chart there are several things worth noting:
- GOOG’s Relative Strength Index (RSI) has been very much range bound since early May.
- Bollinger Band Width is at the lowest levels seen in the last 6 months.
- There is clearly defined technical resistance coming in around $565.
- Primary technical support is clearly recognizable at the $520 level.
Google Inc. (GOOG) Stock Chart
With Google stock trading sideways over the last month, it’s reasonable to assume there may be some greater movement coming in the near future. Which direction is anyone’s guess, but savvy traders can use credit spreads to take a directional view on the stock.
On the bullish side, credit spread traders could look at spreads slightly below the primary support. At the time of this writing the 510-500 July 17th bull put spreads looks like this:
Premium: $1.60
Capital at Risk: $8.40
Potential Return: 19.05%
Bearish traders might construct a bear call spread assuming that resistance at $565 will hold. At the time of this writing, the 570-580 July 17th bear call spread looks like this:
Premium: $1.85
Capital at Risk: $8.15
Potential Return: 22.70%
Which way do you think GOOG stock might move and how are you trading it?
Twitter: @OptiontradinIQ
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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
