Benefiting from negative overreactions to earnings (GOOG)
Last week Google announced their earnings into the swirl of negative news and hype surrounding Japan, Sell in May and go away, buy the rumor and sell the news, recent S&P comments about US ratings, and a general skittishness that the rally may be topping. What better time to take a chunk out of a well known market leader, and allow the funds to establish large options positions at a lower decelerating delta to the downside. Conversely the rebound from these levels after one more shake out of the weak, should be 15 to 20 points or 3% by May expiration.
I expect a run to 550 given the call activity at the bid for the May contract, and am positioning myself to benefit from such a move on any price action under 525.
Take care,
Vandy
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