Nishant Pant bets on Alphabet's rebound with bull call spread strategy

In the United States, Alphabet (GOOG) has faced ongoing pressure in its stock price despite surpassing earnings expectations in late October 2024. Over the past four weeks, this underperformance has been mirrored by the Nasdaq index, which also struggled last month amid a generally bullish market atmosphere. Recent developments indicate a potential shift in momentum, highlighted by the Invesco QQQ Trust (QQQ), which tracks the Nasdaq and attained an all-time high on December 2, 2024. This milestone suggests that the technology sector may be fostering conditions for an end-of-year rally as investor sentiment changes. Analyzing GOOG's stock performance over the last six months reveals a significant pattern of support and resistance. The stock has shown resilient behavior around the $165 support level, repeatedly drawing buying interest whenever the price dips below this threshold. Evidence of price stability emerges from the formation of higher highs and higher lows, reinforcing the idea that a turnaround may be imminent. Furthermore, the Relative Strength Index (RSI), a momentum oscillator, displays indications of a reversal, implying a decline in downward momentum, which aligns with the broader bullish technical patterns observed in the market. To capitalize on this potential rebound in GOOG's price, Nishant Pant has proposed a bullish trading strategy known as a bull call spread. This involves purchasing a call option at $170 and selling a call option at $175, both with a December 27, 2024, expiration date. By executing this strategy with ten contracts, Pant's risk is limited to $2,500, while the potential profit remains capped at the same amount based on the spread's structure. This strategy reflects a calculated approach to engage with GOOG's expected price movements without taking on excessive risk. In conclusion, the current market conditions may be conducive to a rebound in technology stocks such as Alphabet. The combination of market indicators, trading strategies, and the recent performance of the Nasdaq suggests that investors like Pant are positioning themselves for potential upside in the coming weeks. The upcoming expiration of the options on December 27 could be a critical point for assessing the success of this trade setup as market sentiment continues to unfold.