Google Still Going Strong

Google (GOOG, $578.47, up $20.00) continues its steady climb after its earnings announcement on the 18th. The stock is up another 3+% today after the company’s CEO had some positive things to say. Here is all you need to know. In an interview, he said, “In our case, we focus on quality, and we have a very simple model. If we show fewer ads that are more targeted, those ads are worth more. So we’re in this strange situation where we show a smaller number of ads and we make more money because we show better ads. And that’s the secret of Google”. I love that last sentence.

I have been mentioning over the last few weeks how Google could continue to climb based on Microsoft’s (MSFT, $29.15, up $0.51) and Yahoo’s (YHOO, $27.15, down $0.21) ugly battle. The stock is making a big push at $600 and that would mean a $150 move since their earnings announcement. Wow!

I had also mentioned that traders were active in the May 500 calls (GOPEO, $81.00, up $20.10) before Google announced earnings. They were selling for $7 at the time. It’s hard to believe a 10 contract option trade that would have cost you $7,000 would now be worth $81,000 in two weeks. Now that’s making money.

Google is well aware of just how much they stand to benefit from the Microsoft/ Yahoo stand-off. When a fire gets low, you throw more wood on it. If it gets too low, it’s likely to go out or smolder. It looks like Yahoo and Microsoft are smoldering and its no wonder that Google stoked the fire today.

Rick Rouse
Rick@OptionsMentoring.com

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