trade google neutral options
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Trade Google Stocks This Way to Get 80% Return

Do you dream about creating a passive income from buying blue-chip stocks like Google?

But GOOGL costs $2000 per share which is difficult to allocate your assets and manage risks.

We will show you how to trade Google with less Buying Power and get a great return.

Why Trade Google Stocks?

Google is the world's most popular search engine, with 92% of the global market share for search. We are so used to browsing the internet through Google as the first step, its name is synonymous with the verb search.

google和alphabet的軟硬體服務
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Google and Alphabet provide a lot of services that we can't live without.

Google and its parent company Alphabet provide a lot of hardware, software and cloud services that we use almost every day, so we expect GOOGL to continue to rise in value over time.

GOOGL Price Trends Over the Past Year

Google's stock price continued to climb at a steady pace during the past year, similar to other blue-chip companies in the S&P 500 index, such as FAANG stocks, Facebook, Apple, Amazon and Netflix.

But GOOGL has risen to around $2100 per share, making it a big stock that is difficult to make investment risks with asset allocation.

去年GOOGL股價走勢
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GOOGL had strong and steady growth in 2020, with a stock price approaching $2100.

We need a way to trade GOOGL with minimum Buying Power to maintain a good asset allocation while having a high Return on Capital (ROC).

How to Increase Leverage Without Increasing Risk

If we monitor the Bollinger Bands on Google's stock price, we notice right now the IV is high due to wider Bollinger Bands. So this is a good time to sell options for a high premium, then we can close the trade in the future when IV falls.

bollinger bands of GOOGL
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Based on the Bollinger Bands of GOOGL in the past year, right now the stock’s IV is relatively high.

Since we cannot be 100% sure whether Google will rise or fall in the short term, we can use the Options Scanner to define an Iron Condor that is profitable if the underlying doesn't experience a huge move:

  • Sell a $1950 Put and a $2190 Call to define a profitable price range
  • Buy a $1940 Put and a $2200 Call to set a limit our maximum loss
Google股票的Iron Condor
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We can define an Iron Condor for GOOGL with 80% ROC.

This trade has around 50% Probability of Profit, and requires $555 Buying Power for $445 premium, with 80% ROC.

If GOOGL remains within the range of our strike prices after a month and a half, the 4 options will expire worthless, and we collect all the premium.

Trading an Iron Condor on TD Ameritrade

If we visit the Trade tab inside TD Ameritrade, we can choose the options that expire next month, and sell an Iron Condor at $1950.

賣鐵兀鷹iron condor
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SELL a $1950 Iron Condor in the Trade tab.

Fine tune the trade settings:

  • SELL $1950 Put
  • SELL $2190 Call
  • BUY $1940 Put
  • BUY $2200 Call

adjust google iron condor settings
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Adjust the Strike Prices and quantity of the Iron Condor settings.

Finally change the contract Qty to 1 and analyse the trade.

max profit and loss of iron condor
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Maximum profit and maximum loss of an Iron Condor.

This trade has around 50% Probability of Profit, and requires $555 Buying Power for $445 premium, with 80% ROC.

If GOOGL remains within the range of our strike prices after a month and a half, the 4 options will expire worthless, and we collect all the premium.

But any experienced option trader knows that we don't hold onto the options until it expires, but close them early:

  • After you reach 50% profit
  • Or when we are down to 14 days to expiration

So you can maximise your chance of profit with minimum risk.

If we compare trading stocks versus trading an Iron Condor, we see that stocks have only 50% chance of profit, and it requires a large upward price move to have a high return.

Trade MethodStocksIron Condor
Market directionUpwardNo matter rise or fall
(stay within the range of strike prices)
Probability of Profit50%48.27%
Maximum returnDepends on size of upward move80%
Cost of trade
(or buying power)
$2,100$555

Trading an Iron Condor gives you more room for profit without being correct on the direction of stock movement, as long as the stock price stays within your strike prices, you can collected up to 80% Return on Capital.

Trading options only requires 1/4 of the Buying Power of buying shares, making it easier to manage your portfolio.

Now is your turn to try the strategy we discussed today. Please leave a message below if you want me to analyse other popular stocks.

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