3 Stocks You Can Go Long for Free – GOOGL FB CRM

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The stock market has been rangebound for a while. That’s a strange thing to say when stocks are in record territory. The default direction has been upward, and investors are unwilling to sell their long positions. That’s likely because they think central banks across the globe are willing and able to keep saving equity markets with loose monetary policy.

3 Stocks You Can go Long for Free - GOOGL FB CRM

With the European Central Bank’s commitment to its easing programs and the reluctance of the U.S. Federal Reserve to tighten, don’t expect this to change in a big way in the future.

So the here and now is that quality tips are harder to find. We’re left trying to buy high and sell higher.

Luckily, the options markets open up a few other ways to profit from upward-moving trends without being at risk at current prices. Right now, I’m targeting three stocks we can trade with no cost to us.

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Stocks You Can Go Long for Free: Alphabet (GOOG, GOOGL)

Alphabet Inc stock chart (GOOGL)
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Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) is up a modest 3% year-to-date. It hasn’t captured headlines in a while, and it’s fighting a few legal battles, but it’s a solid company with a rosy outlook.

Google dominates traditional search and is looking to also dominate in mobile and the cloud arenas. Its video streams are likely to be a great source of future growth, too. So, unless management completely drops the proverbial ball, GOOGL should be a long-term buy.

The trade: Sell a GOOGL Nov $730/$725 credit put spread for 75 cents per contract. This has a 90% theoretical chance of success, and if successful, it will yield 18% on the money you risk. We need Alphabet stock to stay above the sold strike price for the next 74 days. This trade is set with a price buffer of 9%, meaning GOOGL would have to fall 9% to reach my sold strike.

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Stocks You Can Go Long for Free: Facebook (FB)

Facebook stock chart FB
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Unlike Alphabet, Facebook Inc (NASDAQ:FB) is up more than 20% year-to-date. Technically, it’s trading at the upper end of its long-term range, making it a more challenging buy. Fundamentally, Facebook is a solid company with big upside potential.

With more than a billion users, management would need to conjure up a serious gaffe to ruin its current momentum.

The trade: Sell a FB Nov $115/$110 credit put spread for 71 cents per contract. We need FB stock to stay above $115 through November to win. This would represent a 17% yield on money risked. I also have a 90% theoretical chance of success. This Facebook trade is set with a 10% buffer from current price.

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Stocks You Can Go Long for Free: Salesforce.com (CRM)

Salesforce stock chart (CRM)
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Year-to-date, Salesforce.com, Inc (NYSE:CRM) is off 4%. Most of the struggle came on its most recent earnings report. Salesforce has been executing flawlessly for years, so this should be a minor setback.

For this, I can use the options markets to bet long on CRM stock as it approaches the bottom of its long-term trendline.

The trade: Sell a CRM Nov $67.5/$65 credit put spread for 40 cents per contract. To win I need CRM to stay above $67.5 through mid-November. If successful, this would yield 18% on money risked. This trade would leave me with a 10% buffer from current price. I don’t believe Salesforce will disappoint Wall Street in two consecutive earnings reports.

I reiterate that the underlying assumption is that markets in general will be able to hold this level of recklessness. Should the markets correct before November, these trades should be easier to manage than buying the underlying stocks outright at these record-high levels.

I am not obliged to hold any of these trades through their expiration dates. I can close any of them at any time for partial gains or losses.

Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @racernic and StockTwits at @racernic.

Nicolas Chahine is the managing director of SellSpreads.com.


Article printed from InvestorPlace Media, https://investorplace.com/2016/09/3-stocks-go-long-free-googl-fb-crm/.

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