Q4 earnings for Google’s (GOOG) parent company, Alphabet surprised everyone yesterday. While the market value of Apple (AAPL) has steadily been decreasing since mid-2015, the market value of Alphabet has been increasing ever since 2012. If you were smart enough to invest in Google four years ago when the company had a market capitalization of $200 billion, you would be sitting pretty today knowing that the company’s market capitalization is hovering around $500 billion. By contrast, Apple was valued at approximately $400 billion in 2012 and is currently valued at around $500 billion in 2016.

A sharp depreciation in the price of Apple stocks has been one of the most notable developments in the technology sector, and nobody is quite sure how to arrest the declines in what was previously the world’s most valuable tech company. Take a look at the below graphic which indicates in no uncertain terms how sharply Apple has depreciated and how strongly Alphabet has appreciated. As a binary options trader, this information naturally lends itself to call options on Google and Alphabet (the parent company) and put options on Apple.

Of course, the most important component of Alphabet Inc. is Google. And this is precisely the business unit that reported huge earnings in 2015. In Q4, 2015 earnings reports were strongly bullish and this helped to power the company’s share price to $820.44 (+6.4%). If these gains remain today and for the rest of the week we will invariably see Apple being sidelined by Alphabet as the #1 most valuable company in the world. The biggest earnings spikes for Google came from Android and YouTube, and search, which increased to $74.54 billion (+13.5%). The annual operating income from these 3 business units summed to $23.4 billion – substantially higher than the $19.01 billion in 2014. Alphabet has been hampered by calls of late for greater transparency and it obliged with a new structure that is being warmly welcomed. There are several reasons why Alphabet is growing at a rate of knots, including the following:

• Google revenue is up dramatically
• Self-driving vehicles from its other bets business unit
• Alphabet’s net income for Q4 equaled $4.92 billion (+ $7.06 per share)
• In 2015, Alphabet shares increased 43%, while Apple shares dropped 18%
• Other bets garnered a 37% increase over 2014 with $448 million in revenue in 2015
• Alphabet is focused on massive business ventures while Apple is focused on fewer products
• Google has been far more transparent with more disclosure of the costs of its experimental businesses

Should You Buy Alphabet Shares at this Juncture?

At this point in time, Alphabet stock is trading at approximately $807.65 (+ $36.88). The company’s market capitalization is approximately $555 billion, compared to Apple’s market capitalization of $534 billion. However things could abruptly change today or during the course of this week given the inherent volatility in tech stocks and the instability in commodities and China weakness. For Apple, the problem is its latest hardware – iPhone 6 and iPhone 6S; sales are simply not what the company was expecting and this has hurt Apple immeasurably. In Q4 2015, Google generated revenues of $17.1 billion and an operating profit of $6.8 billion. It is especially notable that Google alone was the most successful of all the Alphabet companies.

Combined, the other companies under Alphabet’s wings generated a loss of $1.2 billion for the quarter. These are largely research intensive companies, and for 2015 their total loss was $3.6 billion. The way the company is structured now, it is much clearer to control and manage costs than at any point in the company’s history. Previously, everything took place under Google, now things have been split up so that each department and business unit is accountable to a certain budget and profit/loss structure. One of the biggest areas of growth for Google specifically is mobile advertising – and thanks to Android smartphones and tablets (not iPhone and iPad) this will be the next big money-spinner for the company.

The takeaway

To cut a long story short, buying Alphabet when it is at its zenith is not a smart idea, but as a binary option trade it’s a great idea. Consider taking Call options on price dips  for the next day, as we try and gauge market sentiment for the rest of the week.