Investors are bullish on Alphabet stock

Investors trade Alphabet Inc. (GOOGLE) Today’s call selections in heavy volume show, for the most part, that they are the strongest in the alphabet. GOOGL is up more than 11.5% ahead of its earnings release, a great opportunity for value investors.

GOOGL is on it $303.78 In morning trading on Wednesday, March 4. That’s down from a high of $343.69 on February 2, before the February 4 earnings release.

I discussed Alphabet’s strong Free Cash Flow (FCF) in the February 8 Barchart article.Why Alphabet’s Free Cash Flow Can Survive, Despite Market Fears – How to Play GOOGL“

For example, its FCF increased to $73.2 billion in 2025, an FCF margin of 18.2%. This FCF was almost 1% higher than last year, despite a 74% increase in capex expenses related to AI investments.

This is because the operating cash flow margin increased to 40.9%, from 35.8% in the previous year.

Using management’s guidance on capex, showing that it could double, Alphabet could still generate positive free cash flow. 55 billion dollars In 2026. may rise 72 billion dollars Until 2027.

This means that the shortage in Alphabet stock may have increased.

For example, using an FCF yield of 1.50%, GOOGL stock could be valued at 3.67 trillion dollars (eg, $55b/0.015). This is equivalent to today’s value of $3.87 trillion.

And next year, if FCF increases to $72 billion, Alphabet’s value may increase to $4.80 trillion ($72/0.015), i.e. +24%. It puts (NTM) in the next 12 months, GOOGL could rise $376.69 per share (+24%).

Analysts agree. For example, Yahoo! Financial Reports 68 analysts have an average price target (PT). $359.24 Each section is, in the same way, a barchart mean analyst survey PT $379.11and an AnaChart survey of 35 analysts $339.86.

In other words, the decline in GOOGL stock may have been overdone. This is why investors are flocking to GOOGL call options today.

This can be seen in today’s Barchart Extraordinary Stock Options Performance Report. This indicates that approximately 1,000 call option contracts have been traded $302.50 Strike price to expire on March 9, 2026 (Monday).

This means that these call options are in the money (ITM), because the strike price is below the spot price. Investors who buy these calls believe that GOOGL will remain at $302.50 on Monday. They are ready to pay $4.97 At the middle point, setting the break-even point of the long investment $307.47.

This break-even point is only 1% or so higher than today’s price.

Furthermore, sellers covering these calls may be willing to accept this income, even if they sell their shares at $302.50.

For example, the total return for the customer is $303.78 1.20%:

Earnings = ($4.90-$1.28) = $3.65 (ie $303.78-302.50 strike)

$3.65/$303.78 = 1.20%

Making 1.20% for five days by selling covered calls is a huge profit.

This is a risky bet, however, because if GOOGL falls below $302.50, the covered call seller (as well as the call buyer) has a loss.

Investors should therefore be careful in copying these trades, as short-term periods can be highly volatile and speculative trades.

It is better to sell out-of-the-money (OTM) puts one month away and buy long-dated call options, as discussed in the February 8 Barchart article.

As of the date of publication, Mark R. Heck, CFA held no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com