Tuesday, July 12, 2011

$GOOG at $250?

[guest post by TS]

Will Google+ drive Google's price higher, as it's still 30% shy of it's 2007 high, or will surface virtues of a whole new social paradigm turn out to be hidden tragedies when people realize that Google is enticing people into categorizing their email contacts more precisely so that Google's ad engines can target them more effectively?  I'd been adding people fluidly to circles within in my Google+ account, when the thought struck me: what if this is just the way that Google has determined that for free they can improve the quality of their data mines, with well-categorized email addresses/contacts?

I know this is crazy talk, a la Mel Gibson's Conspiracy Theory (a great movie--but is it just that??), but how would one target this kind of event-arbitrage idea with a long-term trade (assuming Google+'s true identity isn't immediately revealed)?  I suggest something like the GOOG 2013 $260 Puts, which are roughly 1/2 the current price, at this moment selling at an Ask of about $2.90/contract.  If you've more cash in your account that I do (and I don't do margin), you may consider something closer to in-the-money like the GOOG 2013 $460 Puts, currently asking $42.10 per contract.

I personally think this is a crazy idea... but given the trend of Google slightly stepping away from it's original "do no evil" mantra, it's certainly not out of the realm of possibilities.


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