Traders Hesitant on Overbought GOOGL Stock

GOOGL reports earnings next Monday

Google parent Alphabet Inc (NASDAQ:GOOGL) is preparing to report earnings, hoping to replicate the success of other large-cap tech stocks we've seen this week. Ahead of the event, scheduled for after the close next Monday, April 29, there's an unusual setup in GOOGL's options pits. Specifically, put open interest is greater than call open interest among contracts expiring within three months. This is rarely the case, evidenced by the fact that the security's Schaeffer's put/call open interest ratio (SOIR) of 1.11 ranks just 4 percentage points from an annual high. Peak front-month open interest, meanwhile, sits at the May 1,150 put.

It's not like GOOGL has typically been volatile post-earnings, averaging just a 3.4% swing after reports in the last two years. But there is reason to be cautious, since the equity's 14-day Relative Strength Index (RSI) of 70.6 just ran into overbought territory once again, after a similar signal preceded a brief pullback last month. The stock's 14-day RSI shouldn't be surprising, however, since it has gained almost 17% in the past three months, with the stock last quoted at $1,266.40.

Meanwhile, analysts at BMO raised their price target to $1,200 from $1,100. This comes a day after Google's Wing drone received clearance to deliver items later this year from the Federal Aviation Administration (FAA). Only one covering analyst has anything less than a "buy" rating on GOOGL.