Yesterday, ^GOOG^ announced that it would build a high-speed broadband network – which it says will be 100 times faster than today’s infrastructure. The announcement was made on the company’s Internet site, saying that it plans to build and to test the new network “in a small number of trial locations across the United States.” GOOG’s goal is to develop a network fast enough to download a full-length feature film (legally of course) in less than five minutes. Most of America has access to 1 gigabit per second download speeds, but GOOG plans to top that by 100 times.
This news, while very interesting, didn’t propel GOOG, as it was caught up in the bearish lean of the day – dropping ever so slightly. This lean may have been assisted by news that the Iranian government may be building a virtual wall against GOOG’s Gmail in an attempt to censor its citizen’s communications.
Surfing through the day’s option activity shows that the front-month February 540 call saw the heaviest activity, with 4,385 contracts crossing the tape. On the flip side the most active put was the February 530 put with 2,335 contracts traded. This seems to suggest that option players expect GOOG to make a slightly higher or lower move by the time February expiration rolls around. Could this be the cashing in of contracts? Yes. If that is the case, perhaps we have some bulls or bears jumping ship in reaction to today’s news. With the stock facing short-term overhead resistance, it could give a hint as to the nature of the option activity.
Dan Passarelli is the author of the book Trading Option Greeks and founder and CEO of Market Taker Mentoring LLC. Passarelli began his trading career trading on the floors of the Chicago Board Options Exchange and the Chicago Board of Trade making markets in options. He regularly shares trading insights and educational tips in his options blog (markettaker.com/options_blog/). Dan can be reached through his website MarketTaker.com and can also be followed on Twitter at twitter.com/Dan_Passarelli.