Insights 
VT 
This week, the earnings calendar gains momentum with Alphabet’s report on Wednesday. Previously, it beat earnings expectations but then saw its stock drop from $165 to $147.84 due to market share concerns. The stock has rebounded by 27.5% since then, closing today at $188.61, marking its highest since February 7. The stock reached an all-time high of $207.05 on February 5.
In technical analysis, Alphabet’s stock is above its 50-hour, 100-hour, and 200-hour moving averages, at $182.71, $179.63, and $176.59, respectively. Falling below the 50-hour MA suggests a potential 3.25% decline. Dropping below the 100-hour MA indicates a near 5% decline, while the 200-hour MA implies a 6.5% fall. Analysts anticipate earnings per share (EPS) of $2.17, a 14.81% increase from last year, with revenues rising by 10.8% to $93.91 billion.
Key Earnings Releases
The stock has remained mostly unchanged for the year, closing 2024 at $189.30. Key earnings releases for the week include NXP Semiconductors, Lockheed Martin, Coca-Cola, and Tesla. Companies like IBM, Chipotle, and Intel are also on the schedule, spotlighting a diverse range of sectors.
We believe this week’s heavy earnings calendar, particularly with the reports from GOOGL and TSLA, sets the stage for significant market volatility. The memory of the last post-earnings sell-off for the search engine giant, despite a beat, is fresh in our minds. This history suggests that even strong numbers might not be enough if the narrative around AI competition isn’t managed perfectly.
Given this uncertainty, we are looking at options strategies to capitalize on a potentially large price swing in either direction. The provided technical levels, like the 50-hour moving average near $182 and the 100-hour MA around $179, serve as excellent targets for put option strike prices. A break of these levels on any disappointment could be swift and profitable for bearish positions.
Online data shows the options market is currently pricing in about a 5.5% move for GOOGL following its report, which aligns perfectly with the potential drop to the 100 or 200-hour moving averages. This market-implied volatility suggests traders are anticipating a significant reaction, making strategies like buying a straddle or strangle appealing. This allows us to profit whether the stock surges toward its all-time high or breaks down below key support.
Market Reactions and Strategy
This approach isn’t limited to just one company, as the report from the electric vehicle maker on the same day will also be a major market-moving event. We see similar opportunities in other volatile names reporting, like INTC and CMG, where earnings surprises often lead to outsized moves. A disappointing report from any of these giants could weigh on the entire Nasdaq 100 index.
Of course, we must also prepare for a bullish outcome, as the stock has rallied strongly into this report. If the company shows robust growth in its cloud division and addresses AI market share fears, a move toward the all-time high near $207 is plausible. In this scenario, holding call options or the profitable leg of a strangle would be the correct response.
Once the numbers are out, our focus will shift to how the price reacts around those key moving averages. A decisive break and hold below the 200-hour MA at $176.59 would signal that sellers have taken control for the short term. This would make us more confident in holding bearish positions, with the next major target being the retracement level near $171.89.
