We exited four March 145 puts yesterday for a loss of about $200, a number you should keep in mind if a potential $4000 offset in Google comes home. That was the idea of it: If we’re going to get stopped out of a short position by an institutional stampede, we may as well have a bullish piece of something the Wall Street whack-jobs like.
As for Goldman, the Hidden Pivot rally target at 149.42 that looks like it’s about to get left in the dust is not, as they say, chopped liver. And that means the stock could be headed significantly higher. We look now to the weekly chart for perspective and find a 205.09 target that seems a little farfetched at the instinctual level but entirely plausible at the technical level. The rally pattern is not exactly Marilyn Monroe — more like, say, Ida Lupino — but its vague, 144.68 midpoint has already been trashed, giving us yet one more reason to take the 205.09 target seriously. Let’s make a very low-risk bet on this prospect via the April 170-175-180 call butterfly. Bid 0.05 or better (versus 0.03 debit on yesterday’s closing marks) for 8 spreads.
This implies that, in the end, you will be long eight April 170s, long eight April 180s, short 16 April 175s; and that the total cost of the position, commissions excluded, will have been 0.40. That means $40 plus commissions would be our maximum loss, with a maximum possible gain of $8000. We may wind up trying to leg into the spread, perhaps buying 170-175 spreads 1:1 at a swing low in the underlying stock, then selling 175-180 call spreads on a rally. I am not suggesting that for now, though, because technically speaking, Goldman has not yet broken out above the 149.42 target.