Bought GOOG? What To Do Next

Okay, let's follow up on this Google trade.   Let's say you acted on the ideas I wrote about yesterday and over the last few weeks as I'd been literally jumping up and down screaming to buy Google below $500 and now you've got a good-sized common stock position and a decent chunk of what were slightly-in-the-money, but are now deep-in-the-money calls.

In other words, you're feeling like a king right now.  First lesson: don't pat yourself on the back.  I might not even tell anybody about the sweet trade until after I've closed some of it out.  Why?  Because my first boss on Wall Street, Andrew Lanyi, taught me long ago that you don't count any victories until the money's in the bank.  There's a back story there about me counting my chickens before they hatch on a huge account opening that I'll tell another time.  I digress, don't I?

Second lesson:  Take some profits.  It doesn't get much better than this set up, frankly, for a trader.  You're up huge on both your investment piece of Google (most of the common stock) and on the trading piece of Google (the options and a little bit of the common stock). So it's time to take some profits.  I'd probably sell half the calls today - this morning, first thing as soon as the options market open a little bit after the markets open.  I'd plan on selling the rest of the calls next week.  All of 'em.  A trade is a trade is a trade.  So take the trade.

And after you've sold all those calls, you can at least go out and tell your girlfriend about that awesome trade you nailed as you share a bottle of good red wine (you know I'd get a Tuscan since all the best things in life come out of Italy and all).

Of course, as you're sipping that wine you'll be wondering what Google's doing to monetize YouTube...and what about the Viacom suit against YouTube...and does Hulu's commercial content approach undermine YouTube's chance at being a commercial content hub...and what if search word prices are totally cyclical and about to collapse with the broader economy...and you gut will start turning as the butterflies flutter.  And you'll lose your appetite as you picture yourself up at 2am reading SEC filings from media companies who advertise on Google for some clue as to what the elasticity of display ads are...

So anyway, take the trade. And I think I just realized that I don't mind the fact that I'm not trading any more and am missing the adrenalin rush of what this trade would feel like this morning.  Because running money really is for idiots!

Anyway, as for that common stock that's left, I'd stick with a pretty good sized position in Google for a while here.  I mentioned here on the blog and on Happy Hour yesterday that I think the stock can go to $1000 sometime in the next few quarters and I'd certainly stick with some common to get there.  I'd also nibble on weakness and sell strength with that small "trading portion" of the common.  But nothing big or too aggressive in 2008, as I've noted many a time too.

And yes, as Jim Kingsland here at Fox Biz and I have been lamenting this morning, I do miss the trading at this very moment. Big time.