The bubble gum used on Google’s (GOOG, $284.12, down $6.88) attempt to hold the $300 dam did not hold yesterday as the bears gushed in. The stock had been testing new 52-week lows and $300 was providing the last line of support for Google. Now that shares are below that level, it will probably act as major resistance going forward.

I pointed out that Google looked poised to fall through $300 and that level was broken yesterday afternoon. To take advantage of the situation I profiled a couple of put option plays.

The November 280 puts (GGDWP, $12.20, up $2.00) were going for $6.00 at the time and I said they had a shot at $10. Bingo. The options closed above $10 yesterday and are up another 20% this morning. Set stops at $11.00.

The December 240 puts (GOUXH, $10.30, up $0.90) were trading at $6.60 and also have a shot of doubling. Set initial stops at $9.00.

The plan is too roll out of the November puts by Friday and you can also close half of the December puts if you wish. The November puts expire next Friday so if you keep them open over the weekend, you run the risk of losing some time premium and you run the risk of a major news announcement Monday morning. I’m not saying Google is going to buy someone out or anything but I’d rather close the November options instead of risking a “good news” bounce. See what I’m saying?

Google has always been a volatile stock and if it continues lower we will profit from the December puts.

Rick Rouse