It should be clear to you by now that we don’t need much price movement to trade ‘em up profitably -- only swings that produce intraday highs and lows, and the ability to use ultra-tight stop-losses. On Friday, for instance, the biggest intraday swing in the mini-S&P was just 6.25 points, or $312. In retrospect, you might ask why anyone would have bothered to attempt to trade such a burp. But if one is able to get on board at the exact low of the move, as we did, and to do so with an initial stop-loss of just two ticks, then even the dullest of days can be rewarding. And not just for day traders, either, as we proved that same day in Sirius Satellite Radio. The stock had peaked earlier in the week at 7.49, its highest high since January, and we took some profits on our long position near the top of the intraday spike. (This lowered the cost basis of our remaining shares to 4.65, by the way.) By week’s end, Sirius had sold off sharply and appeared headed down to a hidden-pivot support at 6.53. So we bid there for “replacement” stock, using a 6.49 stop-loss. (It proved adequate, since SIRI subsequently turned from 6.51). Yesterday, shares of the radio broadcast company traded as high as 6.96, getting us off to a great start.

In Google, we opened a position on Friday that has a longer life span, buying the September 320 – August 320 calendar spread for 3.40. This is a low-risk bull play on a stock that has become almost too pricey to play with. But the way we’re going about it, there’s not much at risk – plus, the position has the ability to produce a profit of as much as $1,500 or so for every $340 we put up. And did I mention that even if GOOG misses our $326 rally target by as much as 25 points, we can still come away with a profit, albeit somewhat less than $1,500?

It’s not too late to get on board, so I’m going to repeat my Google strategy below. If you just want to get your feet wet, I’d suggest doing the spread one time – for 3.10, a tad cheaper than on Friday. Here’s the trade, as originally described:

Google This!

Google is all but guaranteed to reach 326.03 if it can close for two consecutive days above a lesser hidden pivot at 307.27. But how do we play a rally in a stock that costs nearly $30,000 per round lot to own? One of the cheapest and least risky ways I can come up with will be to buy September-August calendar spreads at either the 320 or 330 strike. The call spread is preferred, since puts at those strikes are relatively illiquid. Thereafter, if GOOG were to rally above $320 within the next month, we can know approximately how much the calendar spread would be worth, maximum, simply by checking out current prices for the soon-to-expire August 290 – July 290 calendar spread. Assuming Google is trading for $290/share on Friday, the July 290 calls will have become theoretically worthless, shedding 9.20 of value in just two days. However, the August 290 calls will have lost relatively less – about $3 to $4 , I’d guess – which would put the August 290-July 290 calendar spread at about $18-$19 with the stock trading $290 tomorrow. That is about the maximum we could expect for the September 320-August 320 call spread if Google is trading near $320 shortly before the August 320 calls expire.

And how much is the spread selling for now? Answer: About $370, assuming one pays the offer for September 320 calls ($13) and shorts the August 320 calls on the bid ($9.30). This means that for each Sep 320 – Aug 320 calendar spread we buy for $370, there is potential to make $1,430-$1530 of profit, or roughly 400% over 30 days. Ideally, we would try to leg into the spread, first by buying September 320 calls when the stock pulls back to a hidden-pivot support, then shorting August 320 calls on the subsequent rally. An alternative would be to simply “pay the offer” for the spread, as above: $370. But we’ll plan to take a middle path, effectively bidding halfway between the reflected bid and offer for the September 320 calls (12.85) while shorting a like number of July 320 calls for a price halfway between bid and offer (9.45). That would give us an effective price for the spread of 3.40.

Of course, there’s a good chance the market makers will not sell us the spread at that price, since they typically expect the public to pay full retail on spread orders. We’ll try anyway, though, bidding 3.45 for four September 320 (GGDID) – August 320 (GGDHD) calendar spreads, day order. If the order goes unfilled, we’ll consider trying to leg into the spread, long side first, if and when Google falls to a hidden-pivot support.