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Go Long Alphabet Inc (GOOGL) Stock With No Money Down

Don't be scared of the heat. You can go long fast-running GOOGL stock for free, and with confidence.

Alphabet Inc. (GOOGL)
   

Mega-caps like Alphabet Inc (NASDAQ:GOOGL) have been on fire of late. The mega breakout started in April, leaving the shorts in a world of hurt. Most investors who are not in on GOOGL stock, however, have been left looking for entry points.

GOOGL stock chart
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Of course, that’s the challenge, isn’t it?

While the rally is good news to those who are already long hot stocks like Alphabet, Apple Inc. (NASDAQ:AAPL) or Netflix, Inc. (NASDAQ:NFLX), this poses a problem to potential investors. As fast as GOOGL has been rallying, it perpetually looks like it’s due for a pullback. Alas, dips have been scarce, and even when they do come, they barely register on anyone’s radar.

This doesn’t mean that we have to stay on the sidelines. Three weeks ago, I shared a trade on GOOGL stock that delivered free profits out of thin air and with absolutely zero worry. Another successful trade (to prove it wasn’t a fluke) delivered a whopping $12 per contract in pure profits with zero out-of-pocket expense.

Look, I can’t promise another $12 home run, but I can reset a new trade with profits in hand that would have similar prospects for success.

How to Trade GOOGL Stock Now

The Bet: Sell the Sep $805 naked put and collect $6 per contract. With a 15% price buffer, I have a 90% theoretical certainty that price will expire above my strike so I can retain the premium for maximum gains. Otherwise, I suffer losses below $799 per share.

Usually I like to sell opposing risk for balance.

The Hedge (Optional): Sell the Sep $1,100 call and collect an additional $6 per contract. This bearish bet also has a 90% theoretical chance of success, but if GOOGL stock rallies more than 15%, it could be painful. I would delay entry into this or overweight the bullish side 2-to-1 so I’d still be leaning bullish.

Selling naked options is very risky business and is not suited for a lot of investors. But I could use spreads and still accomplish the same setup and yield more than 15% on risk.

Spreads are by definition self-hedged alternatives to naked puts. If price goes against the trade, the damaged is relatively contained. Compare that to needing to spend $955 per share and hoping Alphabet rallies 15% through September.

My setup will pay me, even if GOOGL stock does nothing through the fall season.

E-mail sellspreads@gmail.com with questions or join me to learn more about options in a personal 1on1 webinar here. 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.


Article printed from InvestorPlace Media, http://investorplace.com/2017/05/go-long-alphabet-inc-googl-stock-with-no-money-down/.

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