Alphabet (GOOGL) has been holding up well and just bounced right at the 20-day moving average.
Alphabet’s business model is built around turning massive global user engagement into revenue through advertising, cloud services, and a growing portfolio of AI‑powered products.
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It reinvests heavily in long‑term bets like autonomous driving, health tech, and advanced AI, while its core Google ecosystem (Search, YouTube, Android, Maps, and Workspace) provides the stable, high‑margin cash flow that funds future innovation.
The Barchart Technical Opinion rating is a 100% Buy with a Strengthening short term outlook on maintaining the current direction.
Long term indicators fully support a continuation of the trend.
Rather than just buying the stock, savvy traders can use the options market to find smart ways to trade Alphabet stock without risking too much capital.
Today, we’re going to look at a couple of bull call spread trades on Alphabet stock.
Here are the parameters for finding some bull call spread trade ideas on GOOGL.
Symbol equals GOOGL Probability of Profit above 40% Moneyness -10% to 0% Days to expiration 30 to 150Here are the results of that particular screener:
Let’s analyze some of these ideas.
Bull Call Spread 1: August 21st 390 – $430 Bull Call Spread
As a reminder, A bull call spread is a bullish defined risk option strategy. To execute a bull call spread an investor would buy a call option and then sell a further out-of-the-money call.
Let’s use the first line item as an example. This bull call spread trade involves buying the August 21st expiry $390 strike call and selling the $430 strike call.
Buying this spread costs around $15.30 or $1,530 per contract. That is also the maximum possible loss on the trade. The maximum potential gain can be calculated by taking the spread width, less the premium paid and multiplying by 100. That give us:
40 – 15.30 x 100 = $2,470.
If we take the maximum gain divided by the maximum loss, we see the trade has a return potential of 161.44%.
The probability of profit is 40.7%, although this is just an estimate and does not indicate the probability of achieving the maximum profit.
The spread will achieve the maximum profit if GOOGL closes above $430 on August 21. The maximum loss will occur if GOOGL closes below $390 on August 21, which would see the trader lose the $1,530 premium on the trade.
The breakeven point for the Bull Call Spread is $405.30 which is calculated as $390 plus the $15.30 option premium per contract.
Bull Call Spread 2: October 16th $395 – $435 Bull call Spread
The next example is on the second line and involves buying the $395 October 16th call and selling the $435 call.
Buying this spread costs around $15.60 or $1,560 per contract. That is also the maximum possible loss on the trade. The maximum potential gain can be calculated by taking the spread width, less the premium paid and multiplying by 100. That give us:
40 – 15.60 x 100 = $2,440.
If we take the maximum gain divided by the maximum loss, we see the trade has a return potential of 156.41%.
The probability of profit is 40.2%, although this is just an estimate and does not indicate the probability of achieving the maximum profit.
Mitigating Risk
With any option trade, it’s important to have a plan in place on how you will manage the trade if it moves against you.
For a bull call spread, setting a stop loss of 50% of the premium paid is a good idea. In the first GOOGL example above, that would be a loss of around $765. For the second example, the stop loss would be around $780.
Traders may also consider a stop loss if GOOGL breaks below key support at $365.
Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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