Google traders are motivated by stocks new high

Call players flocked toward Google Inc (NASDAQ:GOOG - 751.60) on Tuesday, after the company announced plans to launch its Nexus 7 tablet in Japan -- news that may have helped push the stock to a new record high of $764.89. By the time yesterday's closing bell rang, 155,000 calls had crossed the tape, which was almost triple the security's average daily call volume.

Most popular proved to be the October 800 strike, where close to 13,600 calls were exchanged at a volume-weighted average price (VWAP) of $8.35 per contract. However, a significant portion of these options traded at or below the bid price, suggesting they were sold.

Open interest at this strike surged by 10,732 contracts overnight, pointing to the initiation of new positions. This option now holds peak call open interest of 18,911 contracts. Because these calls are currently out-of-the-money, some of Tuesday's traders may have been shareholders writing covered calls with the expectation that the equity will trek closer to the $800 mark (without moving above it) by front-month expiration and hope to generate some extra income on their stock positions. These covered-call players may feel this century mark could act as a ceiling in the short term.

GOOG has seen its fair share of call buying, as well, according to data from International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). At last check, the security sports a 20-day call/put volume ratio of 1.28, confirming that calls bought to open have outpaced puts during the past four weeks.