GOOG Earnings and CMG Earnings Trade Update

• Posted by Robert Sinn
• on July 19th, 2012

$CMG and $GOOG report earnings after the close today. Yesterday I offered a trade idea in CMG which I still like, however, the stock price has moved up a bit and I now slightly prefer like a simple put spread:

Long 1x Jul 395 puts

Short 1x Jul 385 puts

This should not cost more than a $3.00 debit and offers a better than 2 to 1 reward to risk should CMG fall below $385 on Friday.

As far as $GOOG is concerned there is an interesting situation heading into earnings with the market pricing in a significantly smaller earnings move than it has historically priced in (~$32 vs. the usual $37-$38) or which the stock has averaged over the last two years ($48 average post earnings move). Moreover, the chart shows important confluence of moving averages, trendlines, and previous support between $600-$603 with major support below near $560:

 

Earlier I recommended a Jul 605 x 620 bull call spread to subscribers, however, the stock has since rallied over 5 points and I now like a simple Jul 595 straddle as long as you can put it on for less than a total cost of $31.50. For those who are more risk adverse a Jul short iron condor might be preferrable – for example:

Long Jul 605 calls

Long Jul 585 puts

Short Jul 620 calls

Short Jul 570 puts

This is a method of expressing a long volatility view while reducing the downside risk in the event that GOOG remains between 585-605 post earnings.

 

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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