I currently work for a corp. that has a "cash cow", and man, those can overcome almost everything negative imo. I just don't see the advertising $$$ of Google's "cash cow" drying up anytime soon, but since I don't have a vested interested anymore, I hope that it works out in your favor. Out of curiousity, approx. how much would GOOG have to drop for you to be "in the money", or are you thinking total collapse (i.e. a GRAND SLAM :))? It's certainly overvalued now, so a drop is inevitable imo, but to me, total collapse is highly unlikely.

Yes, the amount of money Google makes -- and the general good economy keeping their customers (the advertisers) profitable, does worry me (with my effective short position). It also worries me that Google might take some of their cash and buy a "good solid" business. So long as they pay "insane" amounts for companies like YouTube and Double-Click, I feel good about my PUT position. I expect Ernst & Young -- Google's auditors -- will require them to make some big write-downs before the acquisitions contribute anything significant to Google's bottom line. But things like today's news (it actually is a few weeks old, but the major media outlets seem to be picking it up today due to the FCC's activity) about Google potentially bidding on "spectrum" concerns me.


The options prices vary, and my positions vary -- and it is hard to say how they would react to whatever news might cause the price of GOOG to drop -- so I really cannot give an exact $$ amount on the stock price drop that will "make back" what I've already lost in premiums paid on expired options contracts, or the losses I've taken on contracts I've sold. (Right now, a sharp $100 sell-off could probably make me even.) I try to keep some "way-out-of-the-money" puts in case there is a "total break down" in the stock price (that could be the "grand slam"), and also some more conservative, near-the-money puts (including LEAPs), in case the stock sells off to more reasonable valuations more gradually. As I said earlier, so far, my trading on the puts has been a net money-losing activity; I'm ready to continue (constantly re-evaluating based upon additional news/information) with my PUTs strategy for about another 2-3 years. If I'm still sitting on losses after that time-frame, I'll lick my wounds and move on.

I would agree with you that "total collapse" has its problems -- there are an awful lot of "forces" that will be "working against" that. The government (CA and Federal) will likely "turn a blind eye" rather than investigate any potential "fraud" -- the capital gains taxes paid in CA by Google insiders on their stock sales has had a very significant, positive effect on CA's state budget; no one wants to "question" exactly where the money is coming from. The "victims" (of click fraud) are extremely disseminated, a lot are not even aware of "questionable clicks" their advertisements may have received (it goes back to that "slushiness" I mentioned earlier that exists in advertising).

The whole subject is just "extremely complex" too; it would be virtually impossible to assemble a jury (for either civil or criminal action) that could understand exactly what is going on. It constantly amazes me when I engage in banter on financial message boards with those who have (or at least claim to have) a long position in Google's stock, and so many do not even understand some of the simple things -- like the difference between Google's "AdWords" and "AdSense" programs; things one would expect a Google shareholder to know.

The "lack of knowledge" on the part of Google's public shareholders is probably the "best" potential for a serious collapse in the stock. Many don't know "why" they own the stock (other than, perhaps because Cramer said "buy"), a sharp sell-off, just bringing the stock to more "reasonable" valuations, could trigger a "panic sell-off" by the inexperienced investors holding a significant portion of the outstanding shares.

Time will tell.

...but I can't "tell time" (which song was that from :))? Thanks for sharing your perspective. With my level of investing experience, I have never gone the options route, so I do appreciate the tutorial!