goog's gotten fairly cheap, in my opinion, for a number of reasons: uninspiring search data recently, investors freaking out over the reason for tweaking their search algorithm, and general recession fears.
the recession fears, i think, are fully in the shares here at about 470, down from 700+ not that long ago. yes, i know, who cares where it was, but even at 700 i didn't think it was outlandishly overvalued, because of its growth rate. even in a recession, i think goog easily grows 20 to 25%, probably much more.
so i'd buy calls right here with the stock at about 470 in the following manner:
go out a couple quarters of time here, some generally deep in the money, others slightly out of the money calls; looks like we’ve got the september 400s for our in the money call idea. and we’ve got the september 550s also, for our our of the money idea.
and how much capital? probably 2% to 3%, or so if you're aggressive; 1.5% if you're not for whatever reason.
when it comes to the common stock, maybe 5% or so into a single common stock position sometimes and sometimes more than that, though not often.
do your own DD however! these are MY opinions. goog's a high beta (meaning it’s more volatile than the market) - and options are always risky since they expire after a while…so any money betting on this stuff is wildly volatile at times. any money that’s being bet on options and stocks is going to be at times, of course.
take this post, as you should all of these, as education, not advice. i’m just trying to call it like i see it and feel it.
No comments:
Post a Comment