Google lost nearly half a trillion this week. Here's how Mike Khouw is trading it

"Be fearful when others are greedy, and greedy when others are fearful," said the great Warren Buffett is his classic Berkshire Hathaway shareholder letter in 1986. This week's tech sell-off might provide an opportunity to put that adage to work, particularly if you're inclined to use options. Alphabet's (GOOGL) Q3 2026 earnings report triggered a historic gap down; the stock fell over 12% to $285, shaving nearly $500 billion in market cap. Despite a 103% surge in Cloud revenue that points to underlying fundamental strength, the market focused on the EPS miss ($2.12 vs. $3.02 estimate) and negative free cash flow (AI capital expenditures are relentless!). For options traders, this environment sets up a compelling range-bound play via a short strangle, capitalizing on inflated implied volatility and a deadlocked near-term outlook.While the core business remains fundamentally intact, two near-term anchors are likely to suppress any rapid recovery. First, the sell-side reaction was swift: several firms either downgraded the stock, cut price targets, or lowered forward estimates. Historically, stocks that absorb a wave of downgrades underperform or trade sideways over the next 30 days ...