Google (GOOG, $353.02, up $13.85) turned in a fantastic report card after the bell on Thursday. The company beat Wall Street’s expectations by announcing earnings of $1.35 billion for the third quarter, up 26% from a year ago. Earnings per share were $4.92, which was 17 cents above estimates of $4.75. The stock was up over 10% in after-hours trading to $390 which could set us up for a nice open this morning.

The news is great for a number of reasons. I was anticipating good Google numbers but the market allowed us to play a strangle on Google which made us a sweet return.

The stock traded to a low of $309 on Thursday which allowed us to exit our October 290 puts (GGDVR, $4.10, down $0.10) at $9 or better as they traded to a high of $13. That was more than a 50% gain from our entry point on both the put and call option.

The October 400 calls (GOPJT, $6.10, up $2.10) were at $1.80 when Google hit its low for the day and we kept these open since the puts had already made our trade a winner. The market got a lift in the afternoon session and Google started to rebound which helped the calls recover. Expect a big, big move in these options if Google can hold its $37 after-hour gains. Even if you closed the puts at $10, the calls rebounded enough to already make this trade a double.

Our entry price for both options was $8.50 and we are looking at $16 before the market even opens ($10 for the puts, $6 or better for the calls).

The March 500 calls ($15.60, up $1.60) which I mentioned on Monday at $11.50 should also do well. The went on a wild ride yesterday, trading to a low of $9.80. Some of you may have even taken this trade again if you had a stop of $15.

The government may be printing money like its going out of style to help the market but its a great thing for option traders. This is the best option trading market we may ever witness. Take advantage of it.

Rick Rouse