Have you ever watched a stock plummet, only to sense it’s on the verge of a comeback? That’s exactly the vibe surrounding Alphabet right now. After a jaw-dropping earnings report that smashed expectations, the parent company of Google and YouTube seems poised for a rebound. But with market volatility still rattling nerves, how do you play this opportunity without betting the farm? Let’s dive into a clever options strategy that lets you ride Alphabet’s potential upside while keeping your risks in check.
Why Alphabet Is Ready to Bounce Back
Alphabet’s recent earnings were nothing short of a mic-drop moment. The company reported stellar first-quarter growth, beating forecasts on both revenue and earnings per share. What caught my eye, though, was the hidden gem in their financials: a massive $11.2 billion in other income, up 293% year-over-year. A hefty chunk of that—$8 billion—came from unrealized gains tied to their investment in a private space exploration company. This isn’t just a one-off; it signals Alphabet’s knack for spotting high-growth opportunities beyond its core business.
“Alphabet’s ability to diversify its portfolio while dominating search and video is a testament to its long-term vision.”
– Financial analyst
Despite this, Alphabet’s stock has had a rough ride. From an all-time high of $207.05 in February, it cratered 32% to a low of $140.53 in April, largely due to market jitters over trade tariffs. But here’s the thing: I believe the worst is over. The stock’s now hovering around $165, and the broader market’s starting to stabilize. For investors, this feels like a golden window to bet on a recovery.
The Case for a Bullish Bet
Why go bullish on Alphabet now? For starters, the company’s fundamentals are rock-solid. Its dominance in search and video streaming, coupled with growing cloud revenue, makes it a powerhouse in tech. Plus, the market’s overreaction to tariff fears has left the stock undervalued relative to its growth potential. In my experience, these kinds of dips often precede strong recoveries, especially for companies with Alphabet’s track record.
- Strong earnings: Alphabet’s Q1 results blew past Wall Street’s expectations.
- Diversified income: Gains from non-core investments show strategic foresight.
- Market stabilization: Volatility is easing, setting the stage for a rebound.
But let’s be real—markets can be unpredictable. That’s why I’m not suggesting you go all-in on Alphabet stock. Instead, there’s a smarter way to play this: an options spread that lets you define your risk while still capturing upside potential. Curious? Let’s break it down.
Crafting the Perfect Options Spread
Options trading can feel like navigating a maze, but it’s a powerful tool when done right. The goal here is to bet on Alphabet climbing toward $200 by mid-2025 while keeping costs low and risks manageable. To do this, we’ll use a bull call spread combined with a put sale to offset premiums. This strategy is like buying a lottery ticket with a safety net—it’s calculated, not reckless.
Here’s the trade, set for expiration on June 20, 2025, when Alphabet was trading at roughly $165:
- Sell the $150 put for $2.85.
- Buy the $170 call for $6.25.
- Sell the $190 call for $1.25.
The net cost? Just $2.15 per spread, or $215 for one lot. That’s a small price to pay for a shot at significant gains.
How This Trade Works
Let’s unpack this step-by-step. By selling the $150 put, you’re agreeing to buy Alphabet stock at $150 if it dips below that level by expiration. In return, you pocket $2.85, which helps offset the cost of the calls. The $170 call gives you the right to buy Alphabet at $170, betting on the stock’s rise. Selling the $190 call caps your upside but brings in $1.25, further reducing your outlay.
| Trade Component | Action | Price |
| $150 Put | Sell | $2.85 |
| $170 Call | Buy | $6.25 |
| $190 Call | Sell | $1.25 |
Your maximum profit is $17.85 per spread ($20 call spread minus the $2.15 cost), or $1,785 per lot, if Alphabet closes at or above $190 by expiration. The catch? If the stock tanks below $150, you could be assigned shares, exposing you to downside risk. That’s why this trade isn’t for the faint of heart—you need to be comfortable owning Alphabet at a discount.
Why This Strategy Shines in Volatile Markets
Volatility has been the name of the game in 2025. The Cboe Volatility Index spiked above 60 in April, a rare event that sent shockwaves through the market. Even now, with the VIX still above 25, option premiums are elevated, making straight call buys pricey. This spread is a workaround—it leverages volatility to your advantage by financing the trade with the put sale.
“In volatile markets, defined-risk strategies like spreads can offer a balanced way to stay in the game.”
– Options strategist
Think of it like a tightrope walk. The put sale is your balancing pole, keeping costs low. The call spread is your forward momentum, aiming for a big payoff. Together, they create a trade that’s both aggressive and disciplined—a rare combo in today’s market.
Risks to Watch Out For
No trade is foolproof, and this one’s no exception. The biggest risk is the put assignment. If Alphabet drops below $150, you’re on the hook to buy shares, and a prolonged downturn could sting. Market volatility is another wildcard—while it boosts premiums, it can also lead to unexpected swings. And let’s not forget the time decay factor; options lose value as expiration nears, so timing matters.
- Put assignment risk: Be ready to own Alphabet at $150.
- Volatility swings: Sudden market moves can disrupt the trade.
- Time decay: The closer to expiration, the trickier the dynamics.
That said, I’ve found that disciplined traders who understand their risk tolerance can navigate these challenges. The key is to size your position appropriately—don’t bet more than you can afford to lose.
Is This Trade Right for You?
This options spread isn’t for everyone. It’s best suited for investors who are bullish on Alphabet, comfortable with options, and willing to accept the risk of owning shares at a lower price. If you’re new to options, consider paper trading this strategy first to get a feel for how it moves. For seasoned traders, this could be a savvy way to capitalize on Alphabet’s momentum without overextending.
Trade Suitability Checklist: - Bullish on Alphabet’s recovery - Familiar with options spreads - Comfortable with potential stock ownership - Risk tolerance for market swings
Perhaps the most exciting part of this trade is its flexibility. You can adjust strike prices or expiration dates to match your outlook and risk appetite. It’s like tailoring a suit—get the fit just right, and you’ll feel like a million bucks.
The Bigger Picture: Why Alphabet Matters
Zooming out, Alphabet’s story is about more than just one trade. It’s a reminder of why tech giants remain the backbone of modern portfolios. Their ability to innovate, adapt, and generate cash flow is unmatched. Sure, tariffs and volatility can create short-term noise, but companies like Alphabet have a way of rising above the fray. Betting on their comeback isn’t just a trade—it’s a vote of confidence in the future of tech.
“Tech giants like Alphabet are built to weather storms and emerge stronger.”
– Market commentator
In my view, this options strategy is a microcosm of smart investing: calculated, opportunistic, and grounded in fundamentals. It’s not about chasing hype—it’s about finding value in a market that’s still finding its footing.
Final Thoughts
Alphabet’s recent volatility might have spooked some investors, but for those paying attention, it’s a chance to get in on the ground floor of a recovery. This options spread offers a low-cost, defined-risk way to bet on that rebound, with the potential for solid returns. Whether you’re a seasoned trader or just dipping your toes into options, this strategy is worth a look. Just remember: do your homework, know your risks, and trade with conviction.
So, what’s your take? Are you ready to bet on Alphabet’s comeback, or are you waiting for more clarity? Either way, the market’s always got a story to tell—and this one’s just getting started.
