2 Bullish Ways to Exploit Alphabet Stock
Are you searching for a solid platform to support a stronger buy decision? I’d suggest looking past the headlines and at Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). There’s solid evidence in favor of believing in GOOGL. Along with two strategies for enabling stronger risk-adjusted returns, the case for buying Alphabet stock is an easy one. Let me explain.
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The verdict is in. No, not the one against Alphabet and peers Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN). Don’t forget, U.S. authorities are investigating those companies for flexing monopolistic muscle over consumers. That decision won’t be known for some time. For GOOGL stock investors, it’s price action above all else which matters most.
Bottom line, despite combustible headlines and elevated market volatility this past month, a bullish technical-based follow-through day on Aug. 13 has been confirmed. I’ve discussed this a number of times in recent InvestorPlace articles.
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Historically, almost every significant market rally has begun with this type of bottoming action. As much, I can’t understate the importance of the follow-through day when considering a buy decision in highly correlated, market-weighted stocks. Coupled with GOOGL’s recent burly earnings beat and the fact that shares are at a key inflection point on the price chart, it’s time to put Alphabet on the radar for a stronger purchase.
GOOGL Stock Price Chart
Technically, Alphabet stock’s earnings-driven spike of nearly 10% last month proved key in dismantling a price chart which had been prone to a much larger correction. The timing of the bullish reaction immediately before the broader market came under pressure was unfortunate. But, not entirely.
A bearish environment for risky assets resulted in a lower high and GOOGL shares sliding back beneath key lateral and psychological price resistance of $1,200. Nevertheless, with the market’s follow-through day in place, investors can use the pullback in Alphabet stock to their advantage.
Two Alphabet Stock Strategies
The first approach to going long Alphabet stock is to buy shares on a move through $1,207. This entry waits for a breakout above price resistance. I wrote about this strategy a couple weeks back in an article on gaming stocks to buy. With the additional time to consolidate and a more positive market environment, a second attempt entry is all the more compelling. I’d recommend sizing the position for a blended exit below $1,135 if necessary.
Another means to gain long exposure in GOOGL is through Alphabet stock’s options. Using a limited and reduced risk, entering a position today makes enough sense. One strategy I favor is the Dec $1,250/$1310 call spread.
This Alphabet vertical is priced for around $20 or less than 2% of the risk associated with owning shares. If GOOGL can rally into the year’s end and hit marginally new all-time-highs. You can extract a profit of $40 or return of 200% from the position versus a return of approximately 10% in Alphabet stock.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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