Investors are flocking to tech stocks this year.
The S&P technology ETF, the XLK, is up nearly 6 percent year to date and trading at a mulityear high. Meanwhile, the S&P 500 has risen 3.5 percent over the same period. And one strategist is predicting even bigger gains for the space.
"Technology has really started to outperform the broader market recently," options and ETF expert Stacey Gilbert said Friday on CNBC's "Trading Nation." "Within the ETF space we've seen investors start to move money into technology-focused ETF products."
According to Gilbert, in the past month there's been approximately $810 million of inflows into long, unlevered technology ETFs—which is the largest seen in the tech sector all year.
But what makes the XLK even more attractive to Gilbert is the relatively cheap options prices. "We're actually trading in the bottom third of observations over the last two years," she said. "So on a relative basis, the premium I'm paying for an option is on the lower level [compared to past performance]."
So to make a bullish bet, Gilbert used a simple options strategy. Specifically, she purchased the July 44-strike call for 62 cents. Since buying a call option allows one the right to buy a stock at a given price at a set time, this trade is profitable if the XLK rises above $44.62 by July expiration, or roughly 2 percent in the next eight weeks.
"That would mean a new [multiyear] high for XLK," added Gilbert. "This strategy allows me upside exposure while limiting my downside risk."
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