Alphabet (NASDAQ: GOOGL) has rewarded shareholders handsomely over the past year, yet the stock still trades roughly 14% below its 52-week high.
For investors who believe in the long-term story but are cautious about chasing a big run, selling put options offers a compelling alternative entry strategy.
By selling a put option expiring June 17, 2027, with a $245 strike price, an investor collects roughly $845 in premium per contract covering 100 shares.
That premium alone represents approximately 3.8% annualized on the $24,500 in cash required to secure the trade as collateral.
Parking that collateral in a money market or savings account earning around 5.0% pushes the combined annualized yield to approximately 8.8%.
If GOOGL stays above $245 through the expiration date, the put expires worthless and the investor keeps the full $845 premium without ever buying a single share.
Should the stock fall below $245 and assignment occurs, the investor acquires 100 shares at an effective cost of roughly $236.55 after accounting for the premium collected, a discount of approximately 32% to the current price of $346.77.
The core question for anyone considering this trade is straightforward: would you be comfortable owning Alphabet at a meaningful discount to today’s price?
The fundamental case for ownership centers on the company’s accelerating cloud business, with Google Cloud revenue jumping 63% to surpass $20 billion in a single quarter for the first time.
The division’s backlog of committed customer deals nearly doubled sequentially to reach $462 billion, signaling that enterprise demand for Alphabet’s AI infrastructure remains exceptionally strong.
The legacy Search business continues to perform alongside this cloud surge, with revenues growing 19% in the latest quarter as management noted that user “queries are at an all-time high.”
Profitability within the cloud segment has also expanded sharply, with Google Cloud’s operating margin widening to 33% from just 17.8% a year earlier, directly challenging the narrative that AI investment is a bottomless money pit.
The company has additionally managed to reduce the “cost of core AI responses by more than 30%” through engineering and hardware improvements, pointing toward a more scalable and efficient model over time.
The primary risk is the sheer scale of capital expenditure required to maintain this momentum, with the company planning to spend between $180 billion and $190 billion on capital expenditures in 2026 alone.
Management has acknowledged the company is “compute constrained in the near term,” further stating that its “cloud revenue would have been higher if we were able to meet the demand.”
Spending in 2027 is expected to “significantly increase” beyond 2026 levels, meaning the financial burden of this AI arms race is not yet at its peak.
The tension between explosive growth and unprecedented capital outlays is precisely what keeps the stock volatile and makes a discounted entry point via options attractive for patient investors.
The metric most worth monitoring is Google Cloud’s operating margin, as its ability to keep expanding even as capital expenditure ramps represents the clearest evidence that this massive bet is generating sustainable returns.
This put-selling strategy effectively pays investors to wait while the market resolves that central question about whether Alphabet’s colossal AI spending will ultimately translate into proportionate long-term value creation.
