As always, not financial advice but I wanted to take a moment to let you know what I did at the close of trading on Friday. I am adding to my Google modified synthetic long positions.
When I originally placed my first trade on Google, I really wanted it - but it was not quite at the level I would want to load up at. We were trading at support, but I always suspected we might retest the 200 moving average. So I have been waiting to load.
We are there now. Close enough. Good enough. I would be splitting hairs if I tried to wait for perfection.
Why do I say that? This is my favorite chart. Itβs a 4-hour IADSS chart set to extended trading hours. I have a -2.5 mean reversion. We are sitting on a prior support level, closing in on the 200 moving average, which to me is a phenomenal support for any stock or ETF.
This for me is my entry. The market left me breadcrumbs and I followed them. Let me show you what I did - first in the DOM, and then on the whiteboard.
The Trade: Selling the 280/240 Put Spread
I am choosing to sell the 280/240 put spread on Google. Here is how I came up with those strikes: I want a 50% credit for the width of the spread. The spread is $40 wide, so I am looking for $20. I got $19 which is close enough for me.
So I am selling the 280 put and buying the 240 put. That $19 credit? I am going to take it and apply it towards buying an in-the-money call. My goal is always to buy an in-the-money call that is 50/50 intrinsic and extrinsic. I am satisfied with the 240 call because I like the breakeven of this trade.
Here is what the full modified synthetic long looks like:
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Sell December 2028 280 put
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Buy December 2028 240 put
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Buy December 2028 240 call
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Combined debit: $72
Let me show you on the whiteboard why this math works so well...
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The Math: Breakeven, Risk, and Why I Love This Trade
What is my breakeven in December 2028? My strike price is 240 plus the debit I paid which was 72. Breakeven: $312.
What is my total risk? The debit I paid plus the width of my spread. My spread is $40 wide. Max risk: $112.
Now think about that. This stock is trading at $274. I do not have to risk buying stock at $274. I can place a trade that gives me a breakeven of $312 two years and nine months from now and reduce my risk to just $112.
My cash outlay is $72. My margin requirement is $40 - the distance between the two put strikes.
Some of you might say, "But wait, Laura, you have a $19 credit. Would your risk not be $21?" No - because I took some of that credit and applied it towards reducing the price of my call. So my risk is still the margin here, which is $40 for the width of the spread.
Why Google, Why Now
I really like this breakeven. It is not very far out of the money. It would not take a huge move in Google to get there. The all-time high is $350 - so I am even below the all-time high with a $312 breakeven. Different analysts have price targets ranging from $380 to $450. I even saw one at $500 a year from now. This is a two-year-and-nine-month trade. I have time on my side.
If you watched MM1 - Google MSL, you saw my first Google modified synthetic long position. This is me adding to it at a better level - right at the 200 moving average with a minus-2.5 mean reversion signal. That is a powerful combination.
The Flexibility Factor
This is the part I love about modified synthetic longs. I structure my trades from day one so I do not have to worry later. But if Google moves against me, I have options:
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Roll my call down - I can always move it to a lower strike to reduce my breakeven.
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Fund the roll - I sell my 240 put and roll it lower to generate the credit I need.
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Convert to a synthetic long - If Google completely drops and I find a whole new level of support because anything can happen, I have the flexibility to sell the protective put entirely and convert this trade to just a synthetic long. That is Phase 2.
I teach the full MSL framework in Course 301 and repair strategies in Course 302 (both available live or in Kilo Club). If you have not taken those yet, this Market Minute gives you a taste of how I think about structuring and managing these positions in real time.
This trade works for me. It fits into my risk-to-reward parameters and it gives me flexibility for later. I always have a next plan.