Google’s Earnings Just Round The Corner And Trader Expect Less Drama This Time

Posted on Apr 12 2012 - 10:08am by Editorial Staff

With Google to release its quarter earnings report today, things are mugging up with what it will be exactly since the company this time is going to make announcement at least a week prior to what it does. The executives were mugged up with questions about an 8% decline in prices paid by advertisers during the time a user clicked on their ads. The earnings come at a time when Google shares have been somewhat range-bound, trading in a 100-point range between about $660 and $560 over the past six months with the last closed at $635.

“That suggests a lack of commitment from both buyers and sellers,” said Steve Place, a founder of options analytics firm investingwithoptions.com in Mobile, Alabama. “Over the past few quarters, Google options have routinely underpriced earnings volatility, which we believe is largely due to their elevated cost in absolute terms,” said SFG, which is a market maker in the shares.

Over the past 10 trading sessions. investors bought 1.78 calls to every put in Google on three U.S. options exchanges as new positions, according to Schaeffer’s Investment Research. The ratio is higher than 86 percent of all readings taken over the past year. “This suggests there is a good deal of optimism on Google ahead of their upcoming earnings on Thursday night,” said Ryan Detrick, senior strategist at Schaeffer’s Investment Research. “This sets the bar high, and any misstep in the earnings confessional could lead to disappointment.”

“Options flow does not appear to be meaningful in size. While it moderately favors near term upside, overall we judge positioning into the quarter to be generally neutral,” said MKM derivatives strategist Jim Strugger. There is really a lot of cooking inside the search giant but since the time now is not much we are keen on waiting that what the search giant is brining on to as this quarter results.

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Editorial Staff at I2Mag is a team of subject experts led by Karan Chopra.