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Alphabet Inc. (GOOGL) stock remains undervalued based on average analyst price targets. Moreover, shorting out-of-the-money (OTM) puts has been working, and premiums are high. For example, a 1-month 5% OTM put option currently yields 2.50%.

GOOGL is at $335.75 in morning trading on Tuesday, January 13. It's already up over 7% YTD from $313.00, where it closed on Dec. 31, 2025.

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GOOGL stock - last 3 months - Barchart - Jan. 13, 2026

I discussed Alphabet's valuation in an article last month ("How to Make a 1.77% 1-Month Yield in GOOGL Stock - It Still Looks Undervalued" - Dec. 14, 2025).

I showed how GOOGL could be worth over $400 per share ($402.54 price target). That is based on its strong free cash flow (FCF) and FCF margins.

That's still +20% higher than today.

Moreover, analysts have raised their price targets (PTs) since then. 

For example, 36 analysts surveyed by AnaChart.com have an average PT of $354.73. That is up from $343.47 a month ago, as I write in my article.

Yahoo! Finance reports that 67 analysts have an average PT of $339.15, and Barchart's analyst survey PT is $335.62.

The bottom line is that GOOGL stock still looks undervalued.

Shorting OTM GOOGL Puts

My last Barchart article suggested shorting $295.00 GOOGL puts expiring this Friday, Jan. 16. At the time, GOOGL was at $309.09, so this exercise price was 4.6% below the trading price.

The premium received from shorting this put contract was $5.23, providing a short-seller a 1.77% yield (i.e., $5.23/$295.00) for one month.

Today, that premium has fallen to just 6 cents at the midpoint. In other words, it will likely expire worthless on Friday, and the investor's short play has worked.

A new 1-month short-put play is also worth doing.

For example, the $320.00 strike price for the Feb. 13, 2026, expiry period has a midpoint premium of $8.03. That strike price is over 5% lower than today's price.

The premium provides a short-seller a 1-month yield of 2.51% (i.e., $8.03/$320.00).

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GOOGL puts expiring Feb. 13, 2026 - Barchart - As of Jan. 13, 2026

This means that an investor who secures $32,000 with their brokerage firm can enter an order to “Sell to Open” 1 put contract. That money acts as collateral in case GOOGL falls to $320 on or before Feb. 13. It could be assigned to buy 100 shares at $320 if that happens.

But the account will immediately receive $803 in return. That is why the 1-month yield is 2.50%. It also lowers the potential breakeven point if the collateral is assigned:

$320 - $8.03 = $311.97

Downside Protection 

That is 7.5% lower than today's trading price. So, it helps provide some downside protection.

More risk-averse investors could short the $315.00 put option for a $6.48 premium. That provides a lower 2.057% yield (i.e., $6.48/$315.00) over the next month.

But the breakeven point is $308.52, or -8.56% below today's GOOGL price.

The bottom line is that shorting 1-month puts provides good income. 

Expected Returns

For example, over the last 2 months, the investor would have made $5.23 + $8.03, or $13.26 (i.e., $1,326) on an average investment cost of $30,750 (i.e., ($295 + 320)/2 x 100). That works out to a relatively safe return over 2 months:

$1,326/$30,750 = 0.043 = +4.30% ROI

So, on an annualized basis, that works out to an expected return (ER) over 25%:

$4.30% 2-month return x 6 = +25.80% annualized ER 

This is an alternative way to play GOOGL stock, especially if it can be repeated while GOOGL put option premiums remain high. Obviously, there is no guarantee this can work out. 

But, at least the investor doing this can potentially buy into GOOGL stock at a lower breakeven point. 

That may make it more worthwhile to short 1-month OTM GOOGL puts than just buying GOOGL stock.

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