Options Trade of the Week 
Google Inc (NASDAQ:GOOG) Calls  Monday, September 22, 2014

**OPTIONS TRADE OF THE WEEK: Buy the GOOG Jan 2015 650.000 call (GOOG150117C00650000) at or under $7.00, good for the day. Place a protective stop limit at $2.80 and a pre-determined sell at $12.50.


by Ian Harvey

September 22, 2014



Google Inc (NASDAQ: GOOG), a global technology company, which is the dominant force in online search, and is probably the best-positioned company in the world to benefit from the proliferation of connected devices, looks set to trade higher after having seen a lot of turbulence in the past few years, and being quite flat in the past few months.

Even though Google has a market cap of $400 billion, there is still plenty of upside predicted, based on growth ideas, in the near future.

Google is doing a lot of things exceedingly well, such as:-

• Laying the foundation to monetize its immense web traffic with brands such as YouTube, Google Docs, Gmail, etc.

• Adding more physical products to the mix with acquisitions like Nest and Dropcam.

• Monetizing traffic increases exponentially as consumers' reliance on mobile gadgets and connected devices grows, the opportunities for Google to monetize traffic increases exponentially.

• Its dominance in search advertising, display advertising and, increasingly, online traffic from connected devices will grow revenue and earnings fast.

• Google X - the company's "secret" research lab, working on cutting-edge technologies like the driverless car and Google contact lenses. These lenses are a soon to-be-released product designed to monitor glucose levels for diabetes patients. They also help users who can't read without glasses to focus their eyes.


Google last announced its earnings results on Thursday, July 17th. The company reported $5.09 earnings per share for the quarter, missing the analysts’ consensus estimate of $5.16 by $0.07. Analysts expect that Google will post $26.44 EPS for the current fiscal year.

Google X and Continued Technology

Google X has just taken another big step in the lucrative biotech sphere through its acquisition of Lift Labs, a San Francisco-based startup that makes a "smart spoon." This device is aimed at helping people suffering from Parkinson's disease, a debilitating affliction.

Lift Labs by itself will not be a huge money-maker for Google, at least not initially. But the Google X division is a burgeoning wing of Google's rapidly diversifying product lineup.

The acquisition showcases why the company has, and will continue to be, a great investment for long-term shareholders.

Android One

Google’s highlight from the past week was the release of Android One in India. With Android One the company hopes to make smartphones that will be inexpensive but will offer amazing specifications to the customers. This was a very smart move by the tech giant; it promises great potential for profits in the future. With its Android One Google has every reason to believe it will create a strong hold on the Asian low-end smartphone market.

Android One will not be limited to India only; Google plans to reach other Asian countries – a plan that has the potential to bring billions in profits through Android One technology.

Google Fiber

Google brought in ex Qualcomm executive, Dennish Kish, to boost Google Fiber’s coverage across the country. Kish will head Google Fiber and use his operational expertise to expand television and fast internet services to other US cities. This will also create more opportunities for the company who just doesn’t seem to stop growing.

Analysts Opinions

Playlists, few commercials and easy-to-rent movies makes YouTube a one stop shop. As advertisers flee the traditional media platforms in favor of digital platforms, Nomura analysts believe Google Inc stands to benefit the most from its YouTube division.

The firm said, "Given user growth as driven by Google’s investments in YouTube, growth in YouTube’s publishing partners and given guarantees for advertisers on content quality, measurement, and targeted/innovative ad formats, we remain impressed by YouTube’s fundamental financial drivers."

The business model Google possess through YouTube has convinced Nomura analysts to raise FY14 EPS forecast from $25.61 to $26.83 and FY15 EPS from $31.61 to $31.94.

The company has been the subject of a number of other research reports:-

• Analysts at Jefferies Group upgraded shares of Google to a “franchise pick list” rating in a research note on Monday, September 8th.

• Separately, analysts at Credit Suisse reiterated an “outperform” rating on shares of Google in a research note on Thursday, September 4th. They now have a $589.52 price target on the stock, down previously from $745.00.

• Finally, analysts at Stifel Nicolaus initiated coverage on shares of Google in a research note on Wednesday, August 13th. They set a “buy” rating and a $700.00 price target on the stock.

Shares of Google have been given a consensus rating of “Buy” by the forty-one ratings firms that are currently covering the company. Three analysts have rated the stock with a hold recommendation and twenty-five have assigned a buy recommendation to the company. The average 1-year target price among brokers that have issued a report on the stock in the last year is $828.69.


Google is at the cutting edge of a wide variety of technologies. Advertising and search may be its bread and butter for now, but Google isn’t resting on its laurels. The next big thing is always in the works.

Therefore, based on the facts above the following options trade is recommended…..

**OPTIONS TRADE OF THE WEEK: Buy the GOOG Jan 2015 650.000 call (GOOG150117C00650000) at or under $7.00, good for the day. Place a protective stop limit at $2.80 and a pre-determined sell at $12.50.

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