This morning, Goldman Sachs added GOOG to its "Conviction Buy" list, sending GOOG shares soaring above $460, or +3.7%, from yesterday's close of $443.97! Well, "Happy Birthday, Google!" (Yesterday marks the 5-year anniversary since Google, Inc. went public.) In after-hours trading yesterday, GOOG shares already charged higher to $448 on no apparent news. Today, GOOG shares opened above $450 and never looked back.
GOOG August 450 calls, which closed at a mere $0.69 yesterday, went as high as $12.22 and closed at $11.2 today, a +1523% rise! If you had spend just $700 yesterday buying 10 contracts of these August 450 calls, at the end of the day today, you'd have more than $11,000!! WOW!!
We caught a piece of this action today. In our Trading Room, the first thing I said today was (to our readers/members, unintentionally, my first comment each day often turns out to be the most important and/or profittable comment of the day):
August 20, 2009 6:38 AM
good morning!
GOOG/BIDU
strong!
AIG
flying again!!
I jumped on those August 450 calls. I actually started with a bid of only $2.5, but, they opened at $3.6, so, I had to up my bid to $3.8. My order got filled, and, within 1/2 hour, I cashed them out at $8, a whopping +110% gain in less than 30 minutes! That's some pretty good "fast money"!
I played things on the safe side as stocks can get pinched right around whole numbers. I chose to cash this trade out a couple of dollars before GOOG reached $460. A +110 gain is very good and I have nothing to complain. But, I can't help to wonder how many contracts of these August 450 calls (and/or other GOOG long plays) did the traders at Goldman Sachs picked up, or deployed, yesterday. Whichever the case, thank you Goldman Sachs and "Happy Birthday" Google!
Another big mover today was AIG, as its CEO said that the company may be able to repay its federal debts and boost value for shareholders. It was already apparent yesterday that something was going on. The trading volume on AIG jumped over 31 million shares yesterday, twice as much as its 90-day average volume. Today, the AIG August 30 calls went from a 19-cent close to as high as $5.4!! That's an incredible 1-day gain of +2742%!! If you had spent $400 yesterday buying 20 contracts of these August 30 calls, they were worth more than $10,000 at one point and closed at about $5400! These options came down to close at $2.74, still a +1422% rise.
We caught a part of this action in AIG, also, by getting into the Sept 28 calls yesterday, and had already locked in some partial profits at +34%:
August 19, 2009
09:55 | HappyTrading AIG ($27.00) Sold to Close IKGIB Sep 28 calls, at $3.15 +34%
09:08 | HappyTrading AIG ($26.00) Bought to Open IKGIB Sep 28 calls, at $2.35
In our Trading Room, I noted to our subscribers that I had taken some "partial" profits:
August 19, 2009 9:56 AM
AIG
taking some profits; partially out... a quick +34%
This is how I communicate with our readers/subscribers when I think something is going higher. Locking profits is a good discipline, and, getting a +34% gain in about 45 minutes is a good place to take some "fast money" off the table. We also played this on the safe side by having the Sept calls.
Sure enough, this morning, news came out, sending AIG running higher again! I cashed the rest of my position out this morning for an overnight +104% gain:
August 20, 2009
06:52 | HappyTrading AIG ($29.00) Sold to Close IKGIB Sep 28 calls, at $4.80 +104%
After cashing this out, I noted to our "happy traders":
August 20, 2009 6:55 AM
AIG
could go higher; heads to $35 if $30 is broken; so, keep watching...
Indeed, once AIG got above $30, it ran quickly to $35 in less 1 hour. The high of the day on AIG was exactly $35, no more, no less!!
So, do these "news" events happen near the options expiration dates by coincident? (August options expire this Saturday. Every 3rd Friday of the month is the last trading day for the options of the same month.) Perhaps, perhaps not! But, they sure do happen very often. Whether they are deliberate "manuervers" or not, you decide!
Good night and HappyTrading! ™
