(This is an excerpt from an article I originally published on Seeking Alpha on March 6, 2012. Click here to read the entire piece.)
Google (GOOG) has proven itself allergic to sub-$600 prices. On Tuesday, GOOG dropped as low as $594. But for the third time in three weeks, GOOG managed to close above $600 just when it seemed like it could not.
Source: FreeStockCharts.com
Note well that Tuesday’s 16-point intraday range (around 2.7% from top to bottom) is almost the same range that last propelled GOOG above $600. Just like I do not believe in triple bottoms, I do not believe support (or resistance) can withstand more than three tests. I feel a close below $600 is closer than ever.
However, I have been making the case that volatility alone would soon take GOOG under $600 since mid-February. I have been astonished at how little time I have had to realize the profits from the put spreads I have purchased to play this volatility. This third time has finally been a charm, but it has come at the cost of further hedging bets and extra time premium.
{snip}
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on March 6, 2012. Click here to read the entire piece.)
Full disclosure: long GOOG put spreads, calls, and VXX shares and puts