After an extended rally, Alphabet Inc (GOOG) printed a bearish divergence on the daily chart — price continued higher while momentum indicators failed to confirm the move. Many technicians consider this one of the strongest reversal signals. At the same time, RSI is sitting in overbought territory, adding weight to the bearish case.
📉 Overbought conditions. Divergence flashing red.
Setup Selection
With price pushing to new highs while the MACD histogram makes lower highs, GOOG presented a clear bearish divergence. This loss of momentum against rising price set up well for a tactical bear call spread.
As per the strategy, the short strike was selected at the 10-delta level ($217.5) — positioned safely above recent highs and aligning with the system’s rule for high-probability setups.
Implied volatility provided decent premium, creating an attractive reward-to-risk profile. The trade doesn’t rely on a sharp drop — it simply benefits if price remains capped below resistance while time decay erodes option value.
Why Bear Call Spread?
→ Defined risk
→ Reward-to-risk aligned with premium levels
→ No need for a crash — just hold under resistance
The structure thrives when upside momentum fades and buying pressure stalls.
Trade Structure
After testing multiple variants, this configuration offered the best balance of credit and strike placement:
Expiration: August 22, 2025
Short Call: 217.5
Long Call: 222.5
Contracts: 16
Credit Received: $0.24 per contract
Target Profit (net before fees): $384
👉 View on OptionStrat
👉 View in Trade Log
Entry and Exit Plan
Position opened Monday, August 18, on strength into resistance.
→ If GOOG stays under 217.5 and most of the premium is captured ahead of expiration, I’ll look to close early. No need to hold through Friday if the edge is already realized.
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Disclaimer
All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.
very interesting thanks for this