Why the GOOGL Weekly
Options Trade was Executed?
famous hedge fund managers seem to be helping Alphabet Inc (NASDAQ: GOOG,
GOOGL) rise above
In the first quarter, Alphabet suffered a
barrage of questions around how AI might pose a threat to its businesses.
Matters weren't helped at all when the company made a hastily put-together
demonstration of its ChatGPT competitor Bard on Feb. 8. The chatbot gave a
wrong answer at the demonstration, upon which Alphabet's stock fell.
But it looks as if several prominent hedge
fund managers who practice value investing thought those fears were far
overdone, and scooped ups shares on the dip.
That roster of managers looks like a who's who
of famous value investors, including Baupost Group's Seth Klarman, who wrote
the book Margin of Safety; Appaloosa's David Tepper; and Point72's Steve Cohen,
all of whom boosted their stakes in Alphabet in the first quarter.
Perhaps the most notable buy came from
Pershing Square Holdings' Bill Ackman, who runs the most concentrated,
high-conviction portfolio of them all. In the first quarter, Ackman initiated a
new position in Alphabet, with the purchase of both A and C shares combining to
make up 10.4% of Pershing Square's portfolio at the end of the first quarter.
the Google-owner had lagged behind other megacaps this year amid fears it was
losing ground in the race to deploy AI products. Yet since it unveiled its latest
AI tools at a developer’s conference last week, the stock has advanced 12%,
adding $160 billion in market value and erasing its underperformance against
peers like Apple Inc. and Microsoft Corp.
are questioning whether Alphabet is a winner or loser as AI changes the
landscape,” said Jason Benowitz, senior portfolio manager at CI Roosevelt.
“This puts them more solidly in the winner camp.”
continued its outperformance on Tuesday, rising 3.3%.
Also Read “Alphabet Inc Provides 63% Potential Profit Using A Weekly Option In
Less Than 5 Hours!”
The Google Weekly Options Trade Explained.....
** OPTION TRADE: Buy GOOGL
JUN 02 2023 120.000 CALLS - price at last close was $2.60 - adjust accordingly.
Obviously the results will vary from trader to trader
depending on entry cost and exit price that was undertaken.
Entered the GOOGL Weekly Options (CALL) Trade on Wednesday, May 17, 2023, at
9:53, for $2.30.
Sold half the APPL weekly options contracts on Wednesday, May 17, 2023 for $3.75; a potential profit of 63%.
Sold the other half on Friday May 19, 2023, at 9:41, for $7.30; a potential profit of 217%.
Don’t miss out on further trades – become a member today!
The London Stock Exchange Group is undergoing its annual
"rebalancing" of its several FTSE Russell stock indices.
Decisions about how much to weight the various stocks within the various
indexes won't be final until June 23, and won't open for trading until June 26.
But already, investment banks such as Jefferies are starting to opine on what
the effects might be for investors.
In the case of the Russell 1000 Growth index in particular, Jefferies
notes that the share of communications services stocks such as Alphabet on the
index will increase by 3.4%. Jefferies further
predicts that this will increase "buying pressure" on Alphabet stock
-- presumably driving up the price as funds and ETFs that mimic the Russell index
buy more Alphabet stock to match the new weighting.
its November launch, ChatGPT reached 1 million users in just five days, and the
generative artificial intelligence (AI) application has become more popular
Wall Street sees enormous upside in the
technology. Goldman Sachs says generative AI could boost economic output by $7
trillion worldwide over the next decade, and Ark Invest believes AI software
could generate $14 trillion in revenue by 2030.
Fortunately, right now is a particularly
good time to invest in stocks. Many companies' share prices fell sharply amid
bear market, so buying opportunities abound for patient investors. But Alphabet is a particularly compelling option.
invested heavily in AI over the years, infusing the technology into many of its
most important products. For instance, Google Search leans on AI to understand
language and surface more helpful results, Google Ads uses AI to improve
campaigns and boost conversion rates for marketers, and YouTube employs AI to
engage viewers with the most relevant recommendations.
to say those investments have paid off handsomely. Google holds a 92% market
share in internet search, it accounted for nearly 30% of global digital ad
spend last year, and YouTube is the most popular streaming service as measured
by viewing time.
Alphabet has also been gaining market
share in cloud computing. Google Cloud Platform accounted for 10% of cloud
infrastructure and platform services (CIPS) in the first quarter, up from 8%
last year, and some of that success is undoubtedly due to its AI expertise.
Google is a leader in AI infrastructure
and AI-powered document analytics, according to Forrester Research. Google is
also a leader in conversational AI platforms, according to Gartner. But the
company is still investing in research and development. Google recently introduced
several new AI products at its I/O developer conference in May.
One of the most exciting innovations is
PaLM 2, a large language model that will power more than 25 other products and
features, including the intelligent chatbot Bard. Similar to ChatGPT, Bard
answers questions ranging from simple reasoning to complex math, but it can
also generate images and write code. Beyond Bard, PaLM 2 will power generative
AI features across Google Workspace, helping users compose text in Google Docs
and Gmail, create images from text description in Google Slides, and organize
data in Google Sheets.
Alphabet has crushed the Nasdaq
Composite Index's 21% gain in 2023. And over the past five years, the dominant
tech enterprise has produced a return of 130%, translating to an annualized
gain of 18%. That's a remarkable performance. And it has been spurred by rising
sales and profits.
Despite being a winning investment,
shares only trade at a price-to-earnings ratio of 27. For a company as powerful
and profitable as Alphabet, it seems that this valuation is asking investors
too much. However, Alphabet's stock is currently cheaper than Apple and Meta
Platforms, both at about a P/E of 30.
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