Alphabet shares appear to have bottomed. How to play it for a quick rebound

So much for a dead cat bounce. Ten days after Alphabet shares experienced their worst one-day drubbing in its history, the search, media and AI giant has barely retraced a faction of its nearly $500 billion in lost market capitalization, having rallied just a paltry 1.5%. The muted recovery stands out for a company that posted its 13th straight quarter of double-digit revenue growth in the same report, with Google Cloud revenue more than doubling. Alphabet's earnings were the first major crack to appear in the AI trade and foreshadowed a series of volatile events for the complex, including the election and the growing scandal enveloping Nvidia CEO Jensen Huang. Still, a bullish case for Alphabet rests not in its post-earnings concerns being unfounded, but rather on its growth being strong enough to withstand them. On Monday, Google launched two new systems built on its custom AI chip, the TPU, a sign the company keeps evolving, and the debate over AI and search is far from settled. The sheer size of the drop, a record one-day loss after a quarter of 25% revenue growth, may also leave room for a reversion toward pre-earnings levels. For investors who agree, options offer a variety of ways to express that view. The trade Based on Monday's close, I'm buying the December 18 285/300 call spread for a debit of roughly $7.07. Alphabet's 30-day implied volatility closed Monday around 35%, higher than about 44% of days over the past year. That is mid-range, so either buying or selling premium can be viable for this trade. A bull call spread is the higher-conviction route. It needs the stock to rally to pay off, but it offers a larger payout if the view is right. Selling a put spread is the lower-conviction route. It can carry a higher probability of profit, but with a smaller reward relative to the risk. Due to the sheer size of the drop and the weak recovery thus far, I'm choosing the higher-conviction call spread. Alphabet has recovered only a small part of its post-earnings loss, still down 11.3% from its pre-earnings close of $324.89. The trade expires Dec. 18 and assumes that gap at least partly closes at some point over the next 39 days, not necessarily right away. The long 285 call sits just in the money, and the short 300 call sits about halfway back from the post-earnings low to the pre-earnings close. This gives the trade a breakeven of $292.07, 1.4% above Monday's close and still about 10% below pre-earnings levels. The trade has a theoretical probability of profit of 47% and reaches its maximum profit of $793 per spread if Alphabet closes at or above $300 on Dec. 18. The maximum loss of $707 comes if shares close at or below $285. If Alphabet closes between $285 and $300 on Dec. 18, the long call can be exercised, leaving investors holding 100 shares per spread. Investors can close the spread before expiration to capture profits, cut losses, or avoid taking on shares. This is a directional bet on a continued rebound, and the main risk is that the recovery stalls, even for a historically strong company. Nvidia's results on Nov. 17 could set the tone for the AI trade, and rates, energy prices, and scrutiny of data center construction remain headwinds to watch. Disclosures: Spina is long this trade. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. This content is provided as part of our editorial output for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual's unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.