The news surrounding Goldman Sachs took stocks lower last Friday. But I am not sure that was the real story.

Almost lost in the SEC fraud charge, was the fact that Google released some disappointing quarterly numbers. The market extracted a pound of flesh from the stocks, to the tune of US $45 to the downside.

A couple of points come to mind. The first is a digression, albeit an important one. Think about Google as a lesson in option etiquette. This is a company that typically releases quarterly results on the last day of trading in the April, July, October and January options. And often, the news has a major impact on Google’s share price.

Here’s the point. While options cease to trade at 4:00 pm on the third Friday of the expiration month, they do not cease to exist. In fact, options do not expire until the Saturday following the third Friday of the expiration month.

Stocks, on the other hand, trade after hours. And if you are short an option contract, thinking that it will simply expire worthless, be aware that sometimes, stocks move substantially in the after hours, which could cause traders who are long a particular contract, to exercise their position. That can lead to some unexpected surprises on Monday. To be safe, consider buying back any short options on the third Friday of the expiration month.

So much for the digression. The real story on Friday was the market’s reaction to Google’s numbers. First-quarter income rose 37% to US$6.06 per share. That’s right I said 37%! Yet, according to some analysts, those numbers were “not terrific.”

What does this tell you about where the bar is being set for tech earnings. Are we expected to use Intel Corp.’s 300% profit increase for the quarter as the benchmark? If so, can any tech company possibly meet those inflated expectations? And if not, what impact will potential disappointments in the tech sector have on the rest of the market?

Has irrational exuberance pushed stock prices too far too fast? Is the tech bubble merely the tip of the iceberg? Is the long overdue correction about to hit?

These are all reasonable questions at a time when option premiums are low. At least the cost of buying some puts for protection is reasonable. And given what we saw last Friday on both sides of the border, put buying may be the best strategy over the next couple of months. Particularly if you have tech stocks in your portfolio.