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My biggest Profit in Option Trading – 486 Percent



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Nov 05 2007
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Question: Name me a stock that defies the gravity and appears to have everlasting rocket fuel blasting into the space. Answer: Google Inc. of course. Not only the stock doesn’t give the stock market a damn even though the Dow was in red for sometime now, it also continues to attract analysts.

In the latest update, Oppenheimer raises their target on Google Inc. (Nasdaq: GOOG, stock) to $850 from $700 saying they believe that mobile advertising opportunities for Google are bigger and traction can be higher than any other advertising opportunities Google has tried to capture so far beyond its core search marketing business.
Options Trading
Google is widely expected to enter the mobile phone market very soon with its own Google phone and operating system for the phones. Looking at how deep is the cell phone’s penetration now, it’s no-brainer to guess the revenue prospect from such a strategy. Analyst Sandeep Aggarwal said advertising revenue from the phones could generate up to $4.8 billion annually in three years and $10 billion per year within five years.

When the market is in red and directionless with the concerns about soured debt mounted after Citigroup Inc. (NYSE: C, stock) warned it plans to book $8 billion to $11 billion in additional losses, investors and speculators are finding alternatives to make money. If you remembered my previous article, it appears investors are finding comfort in technology stocks. The positive news on the upgrade pushes Google’s stock north without the needs to dial the Star-Gate (you watched Star-Gate, don’t you?).

GOOG profit chartSoon my GOOG Nov 570 Call Option will expire worthless. Hence, I decided to take money off the table today, not that I was willing to (I’ve fallen in love with Google – big mistake) considering how beautiful the stock is. So I slapped myself to remind me of the real objective, which is to make money. I’ve promised to tell you my profit margin and here it is, my biggest profit in terms of margin and percentage – 486.9 percent. Whoa! Am I dreaming or what *slapped myself again*? Nope, I can feel the pain.

GOOG ProfitHowever I only disposed two of my contracts leaving the remaining to catch any more upside and also to see if I can break my own record before the Friday expiration. As an option trader, you should know that my position does not have much time-value but only intrinsic-value (it’s very deep in-the-money). The position was opened on 24th Sept 2007 based on price-volume-action. Really, I do not know how to plot the support and resistance level since then as the stock just keep pushing upwards, so much so that the stock skyrocketed from $600 to $700 a share within a record 20-trading-days.

So far I’ve not seen such an explosive movement and I bet the Oppenheimer analyst was as clueless as me how the internet giant could behaved in such a way. The stock could have prompted the analyst and possibly other analysts to keep on raising their target on Google. Can the stock continue to go into the $800 territory? I’m not going to wait to find out but I’m sure it will not disappoint the Google’s fanatics. And I’m sure you didn’t know besides the remaining Nov 570 Call, I still have Dec 630 Call *evil grin* – also entered based on price-volune-action. But for this Dec 630 Call Options I’m not sure it can break the existing record because there’s no earning factor before it expires. Now you know the power of leverage with option trading.

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Comments

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