If the past week’s trend continues, it looks as though technology stocks are likely to profit more than the market at large. But with so many companies to choose from, what’s your best “option” for taking advantage of this momentum?

Rather than try to select which sub-sectors or individual tech stocks will do the best, you can play the entire sector via a long call option on the broad Technology Select Sector SPDR ETF (NYSE: XLK).

This ETF has about 12% exposure to Apple Inc. (NASDAQ: AAPL), and the rest is spread out across a large number of other companies in the Internet, networking, software, telephony and hardware sub-sectors.

We also like this particular ETF because it has excellent liquidity, which keeps costs low and works to the trader’s advantage.

Near-term projections of $24.50 to $25 seem reasonable for XLK.

Trade

Buy to open XLK Nov 24 Calls

Target Entry Price

Right now the option costs 29 cents. We are shooting for a limit order of 30 cents or less.

Position Sizing

With a long call, the maximum risk is equal to the amount invested. This should help you size your position so that if things don’t work out with the trade it won’t be too disruptive to your total account.

To learn more about this trade, watch the video here.

Disclaimer: It is important to understand the risks of trading options before you attempt a trade like this. This article is for educational purposes only.

This article is brought to you by LearningMarkets.com.

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