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In a previous article related to technology and Internet search company Google (NASDAQ:GOOG) posted on April 15, 2012, a bull-put credit spread was considered, since the price of Google's stock had taken a 4% haircut. A bull-put credit spread may be entered for a credit by selling one put option and purchasing a second put option further out-of-the-money with the goal of the options expiring worthless and retaining the initial credit as a profit. The bull-put credit spread highlighted in the previous article consisted of selling a 2012 May 560 put option and purchasing a 2012 May 550 put option. Since the price of Google's stock was $600.40 at option expiration in May and was above the short put strike price of $560, the position was fully profitable and realized a very nice return of 7% (70.5% annualized).

A lot has been happening with Google lately. The company won its patent infringement lawsuit with Oracle (NYSE:ORCL) related to developing its Android software. Google also closed on its deal to acquire Motorola Mobility following approval by the U.S., Europe and China. With the Motorola acquisition, Google has a whole trove of patents to fend off companies like Oracle and also has a hardware company to play around with. How Google transforms Motorola will be very interesting; can't wait to see what happens. Current employees of Motorola better button on their chinstraps, it could be quite a ride.

Google's stock price has been hanging around the $600 range for about seven or eight months and has previous support in the $560 range as shown below:

With Google not reporting earnings for a while, another bull-put credit spread for Google is considered. It is generally not a good idea to be in a spread position for a company about to release earnings results, so entering a bull-put credit spread for Google for June expiration should be ok, as Google typically reports its Q2 earnings near the middle of July. Since Google's previous support is in the $560 range, a bull-put credit spread with a short put strike price below $560 is desirable, and if an attractive position can be found with a short put strike price below $560, then all the better.

Using PowerOptions Mid-Point Spread chain, a bull-put credit spread for Google was found with a potential return of 7.6% (126.4% annualized) as shown below:

(click to enlarge)

The bull-put credit spread selected is the 2012 Jun 515/540. The position's 7.6% potential return is attractive, and better yet, the position has a nice 9% margin between the stock price and the strike price of the short put option. For more risk averse investors, the 2012 Jun 510/535 bull-put spread with a potential return of 6.5%, the 2012 Jun 505/530 bull-put spread with a potential return of 5.6% and the 2012 Jun 500/525 bull-put spread with a potential return of 4.6% are also worthy of consideration. The alternate positions are less risky, but also have less corresponding potential return.

To enter the position, the 2012 Jun 540 put option is sold for $3.35 and the 2012 Jun 515 put option is purchased for $1.58. Entering the position results in receiving a credit of $1.77. A profit/loss graph for one contract of the 2012 Jun 515/540 bull-put credit spread for Google is shown below:

A management point of $565 is set for the position. If the price of Google's stock drops below $565, then management for a roll or exit should be considered.

Source: Another Bullish Position For Google