Heightened Trading In Alphabet Stock May Drive Traffic To Direxion's GGLL And GGLS Funds

Technology juggernaut Alphabet Inc GOOGL GOOG has been on the move, gaining over 5% in the trailing month. Some of the enthusiasm can be attributed to the rising demand for artificial intelligence.

Recently, Benzinga Neuro mentioned that Sir Demis Hassabis, head of the company's Google AI division, will be heading the development of an AI model designed for research assistance. Primarily, the protocol aims to facilitate interdisciplinary collaboration and foster productive synergies in scientific investigations.

In addition, Alphabet's autonomous driving tech division Waymo introduced its sixth-generation hardware in late August. The new initiative is expected to help reduce costs while at the same time delivering superior performance, particularly during winter weather conditions. Notably, automotive research firm S&P Global Mobility projected that autonomous vehicle sales in the U.S. may reach 230,000 units in 2034.

Interestingly, trading activity – as based on implied volatility (IV) in the options market for GOOG stock – appears to be picking up steam. Around the middle of September, IV rank (or the current IV relative to the trailing 52-week average) sat around 28%. As of Wednesday's close, this metric soared to almost 75%.

IV represents the market's expectation of price movements (either to the upside or downside). During periods of high IV, premiums on options tend to be priced higher than usual due to increased demand.

It's likely that trading activity is rising in GOOG stock due to Alphabet's upcoming third-quarter earnings report, which is scheduled for Oct. 22. While the latest trades have largely been bullish, not everyone is optimistic. Benzinga Insights reported that market whales have placed options trades featuring bearish sentiment.

The ETFs: With a tug-of-war centered on one of the world's most powerful companies, the dynamic offers rich grounds for financial services firm Direxion. Specifically, the company's GOOGL-focused, leveraged and inverse exchange-traded funds allow traders to take quick, directional wagers on the tech giant.

For the optimists, the Direxion Daily GOOGL Bull 2X Shares GGLL targets the daily investment results of 200% of the performance of GOOGL stock. On the other hand, the Direxion Daily GOOGL Bear 1X Shares GGLS seeks 100% of the inverse (or opposite) performance of Alphabet's Class A shares.

For both GGLL and GGLS, it's imperative that traders do not maintain exposure for periods lasting longer than one day. Otherwise, the daily compounding effect of volatility could steadily erode the value of the funds.

The GGLL ETF: Direxion's GOOGL-focused bull fund has seen significant movement this year but has managed to return over 19% since the beginning of January.

• Heading into Alphabet's scheduled Q3 disclosure, GGLL printed a robust performance of nearly 23% up since the close of Sept. 10.
• Rising volume levels ahead of the important litmus test offers bullish traders encouragement.
• However, the GGLL ETF needs to break above resistance sitting at $38 for prospective speculators to be interested in this trade.

The GGLS ETF: Those pessimistic about the overall tech ecosystem have not fared well so far this year, with Direxion's GOOGL-centric bear fund losing about 19% of value on a year-to-date basis.

• Conspicuously, GGLS trades below both its 50-day and 200-day moving averages, suggesting substantial capitulation.
• At the moment, the inverse GOOGL fund is struggling to hold above the support line of $14, which is problematic.
• Nevertheless, GGLS has bounced strongly from its closing bottom this year of $12.34. Combined with bearish options activity, the naysayers might finally have their day.

Featured photo by AS Photograpy on Pixabay.