Trader aims to quadruple his money by betting on Alphabet

If you're hunting for a Cyber Monday deal that's worth your money, you may want to take a look at the stock of tech giant Alphabet.

That's according to Todd Gordon of TradingAnalysis.com, who spots three technical reasons why the company is "on sale" and headed higher after a tough month.

First, Gordon points out that he sees a "three-wave correction" on a daily chart of Alphabet that began at the end of October. Basically, since earnings, the stock has seen two trends lower that have sandwiched a short rally near the beginning of November.

The trader says that this pattern in Alphabet is "the signature look of a corrected move" that indicates the stock's recent rise will continue.

Second, Gordon sees an "inverse head and shoulders" in the charts, another bullish indicator that he says hints at a rally ahead for Alphabet. Pair this with Gordon's observation that Alphabet now has a new support at $785, which used to be the stock's level of resistance, and one spots why the tech giant could see a move higher.

To take advantage of an Alphabet rally, Gordon buys the December 820-strike calls and sells the December 825-strike calls for $1.25 per share, or $125 per options contract. Gordon is betting that Alphabet will close above $825 on Dec. 16, which would net him $500, for a profit of $375. In other words, Gordon could quadruple his money if Alphabet rises about 4 percent in the coming weeks.

Trader takeaway: Todd Gordon believes Alphabet shares are heading higher, and he is buying a bullish call spread in order to profit off of an expected 4 percent rise in the stock.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more