DailyPlay – Opening Trade (GOOGL) – March 1, 2024

GOOG Bullish Opening Trade Signal

Investment Rationale

It’s been hard to ignore the AI theme over the past year where AI-related stocks have seemingly riding a one-way rocket ship. Most stocks that have AI exposure are currently trading at relatively rich valuations and near all-time highs. But GOOGL has a high amount of exposure to the AI theme yet still trades at a reasonable valuation. With its recent selloff, the current risk/reward looks favorable to add some bullish exposure as an AI theme for your portfolio.

Technical Analysis

GOOGL recently broke out above its $140 trading range in mid-January to a new all-time high and recently sold off back towards the $138-140 level as support. I believe that the risk/reward to add long exposure here is favorable with an initial target of $151.50 gap fill level. 

GOOGL – Daily

Fundamental Analysis

GOOGL trades at a very reasonable 20x forward earnings despite analysts expecting nearly 16% EPS growth and a fairly strong potential to accelerate revenues with its investments in AI. Essentially we can purchase GOOGL for the same multiple as the S&P 500 average, while expecting nearly triple the EPS growth rate. 

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 3 Contracts April 5th $135/$150 Call Vertical Spreads @ $6.07 Debit.

Total Risk: This trade has a max risk of $1,821 (3 Contract x $607) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $607 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that pulled back but is expected to bounce higher off support.

1M/6M Trends: Bearish/Neutral

Relative Strength: 4/10

OptionsPlay Score: 97

Stop Loss: @ $3.04 Credit. (50% loss of the premium)

View GOOGL Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Thursday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View GOOGL Trade