Google Falling Behind in the AI Race, Any Money-Making Opportunities Left?
This is the TradingFlow Team, and this article will focus on options or equities, guiding you through the rationale behind compelling trades and demonstrating how to effectively utilize TradingFlow tools.
In this article, we will use examples of Google options trading to see how to profit from directional swings in the market.
Since the emergence of ChatGPT, we've witnessed a surge in stock prices for tech giants like Nvidia, Meta, and others in this AI wave. However, Google, which also established its AI presence early on, has seen lackluster stock performance.
Amidst such price movements, are there still opportunities for profit?
Recently, options traders seized the upward swings in Google's stock price, profiting from bullish option plays.
First, let's take a look at Google's recent stock trends. Looking at Google's daily chart (we'll use Google's Class A shares $GOOGL as our reference), we can see that Google's A shares rebounded after dropping to around $130 earlier this month.
(Source: TradingView)
Last week's upward gap occurred after reports of Apple negotiating with Google for AI features on the iPhone. The news of these discussions boosted market sentiment for Google, causing the stock price to briefly approach previous highs during the trading session
Long Trade on 7th March
On 5th March and 6th March, after Google's stock price hit a new low for the year, there was a continuous inflow of funds for long positions. During trading on March 7th, a large number of bullish options with a strike price of $135 and an expiration date of 17th May were bought:
Looking at the contract open interest (OI) (see chart below), there was a significant increase in positions on March 7th. By the end of the trading day, over 17k contracts turned into open interest. Judging from the OI DIFF indicator, it's likely that traders who opened new positions are holding contracts and potentially profiting significantly after 14th March.
Also on 7th March, there was activity in the options contracts for 19th July with a strike price of $155. The trading volume for contracts with a Bullish sentiment far exceeded the average:
On 7th March, traders transacted at an average price of around $3.28. Subsequently, the contract price peaked on 18th March with an average of approximately $8.98. However, based on the OI data, it appears that traders holding the contracts did not take action and continued to keep their positions open.
Long Trade on 11th March
After 7th March, activity in long positions persisted. On 11th March, there was a frenzy of buying for 12th April call options with a strike price of $143. The unusually high trading volume caught the attention of TradingFlow team:
The trade at 12:32:42 (see above), as seen from the volume exceeding the open interest (OI), is likely a new opening position. The intraday chart (see below) provides a clearer picture, showing significant inflows into call options around 12:16 and 12:32.
Looking at the overall data on 11th March (see chart below), there was a significant increase in open interest (OI) for the 12th April call options with a strike price of $143. Buy orders accounted for 80% of the total. Based on the OI analysis, it's likely that the trader exited some of their positions on 18th March, with an average contract price of $9.09, achieving over 200% return compared to average price on 11th March.
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