Tsk tsk… Last week, it was discovered that Google has been using another company’s patented inventions to build its phones, laptops, and some speakers without permission.
Besides a slap on the wrist and a need to compromise with the smaller company, Google will probably take the scandal in stride – but the California-based wireless speaker company that’s won this court battle against the infamous tech giant is going to see new heights.
This is why I’m watching SONOS Inc. (SONO) closely.
The court ordered Google to stop importing devices made overseas and cease selling said goods until the appropriate changes are made. It has two months to act and avoid the ban on its products.
This order could help push the SONOS and Google into an agreement over patent royalties for home audio systems – a clear win for SONOS, and something that could improve sentiment for the company and drive shares back up to the $34-$35 range.
At this point, let’s buy the SONO April 14, 2022 $30/$35 Call Spread for $2.00 or less. Plan on selling the SONO April 14, 2022 $30/$35 Call Spread for a 100% profit or if shares of SONO close below $27.50.
But Google isn’t the only company making waves. BlackRock Inc. (BLK), the New York City-based asset manager, helped break financial records last year.
As of Oct. 2021, the company had more than $2.3 trillion worth of assets under management, making it the largest provider of Exchange Traded Funds (ETFs) in the United States.
For the first time ever, annual global net inflows into ETFs surpassed $1 trillion in Nov. 2021. This brought total global assets invested in ETFs close to $9.5 trillion, more than twice their value as of the end of 2018, according to data from Morningstar.
Those inflows were great for BLK and the stock gained more than 45% from Mar. 2021 to Nov. 2021. Since it peaked three months ago, the stock has pulled back and has been consolidating, trading in a sideways range ever since.
The recent consolidation along with the company reporting fourth-quarter results this Friday is giving us an attractive trade setup.
I think BLK’s fourth-quarter results are going to look good, really good, and shares will push higher. At this point though, it looks like traders are content to wait and see how the numbers play out before making a move in either direction.
That’s fine by me.
The lower volatility means options are less expensive, which of course, translates into higher potential profits.
If shares of BLK trade down to $875.00 before January 12, 2022, I like buying the BLK March 18, 2022 $880/$890 Call spread for $4.95 or less. Plan on selling the BLK March 18, 2022 $880/$890 Call Spread for a 100% profit or if shares of BLK close below $860.00.
And finally, I’m watching Alibaba Group Holdings Ltd. (BABA), the Chinese online retail giant.
Early last Friday, shares of BABA had gained 21.1% over the previous seven sessions after dropping nearly 42% since its high a year ago.
It was just a matter of time before the buy-the-dip bargain-hunting crowd turned its sights to BABA, but I think there are too many uncertainties right now to take a long position.
As one of China’s biggest tech stocks, the company is still facing huge uncertainty regarding potential regulation as the Chinese Central Government flexes its muscle to reign in Chinese tech firms.
Add to that, a slowing economy and rising COVID resurgences in China and I think BABA might have a hard time growing gross merchandise sales volume (GMV), which in turn, could lead to revenue and earnings miss when the company reports quarterly results later this month.
If shares of BABA trade up to $140 by January 21, 2022, grab the BABA March 18, 2022 $125/$120 Put Spread for $2.25 or less. Plan on selling the BABA March 18, 2022 $125/$120 Put Spread trade for a 100% profit or if shares of BABA close above $155.00.
Go get ’em,
— Shah
Source: Total Wealth