3 Mega-Cap Tech Stocks for Options Traders to Buy

The price trajectory of the Nasdaq has slowed over the past month, bringing a much-needed pause to tech stocks across the land. The silver lining to the consolidation is many of the sector’s biggest names are building new bases to launch from. So far, we’ve seen minimal signs of distribution, and every minor dip is getting gobbled up.

Together, these signs confirm the backdrop remains bullish for tech, regardless of the recent lack of momentum. Besides, the Nasdaq notched a new record just last week, and we remain within 1% of the peak. So until bears give us something to be worried about, it’s worth betting on more upside.

I scanned the biggest names in the sector and found the following three stocks are tempting targets for buyers right now:

After a brief breakdown of each price chart and ideal trigger points for new positions, I’ll share my favorite options trade idea.

Tech Stocks to Buy: Apple (AAPL)

Source: The thinkorswim® platform from TD Ameritrade

As the largest company on the planet, Apple demands the first mention of today’s gallery. June’s awakening jammed its share price to a record high of $150 to the penny. Since then, a textbook symmetrical triangle pattern has formed, allowing overbought pressures to ease and a new, lower-risk entry opportunity to develop. Thursday’s 2% rally officially completed the triangle and set the stage for a retest of overhead resistance.

Traders everywhere are eyeing $150, and you can bet we’ll see some aggressive buying if prices push above it. What’s nice about having such a clear level is that we can use it to trigger today’s trade idea.

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Implied volatility is at the lower end of its range, making long premium plays the obvious choice.

The Trade: Buy the October $150/$160 bull call spread for around $3.50.

Microsoft (MSFT)

Microsoft (MSFT) stock chart with bullish breakout

Source: The thinkorswim® platform from TD Ameritrade

Microsoft’s trend has been a thing of beauty. After taking off in late May, the price has been consistently rising above all major moving averages with hardly any retracements. The few that we have experienced stopped dead in their tracks at the 20-day moving average, which shows just how quickly bulls have pounced on each minor dip.

Over the past three weeks, a classic high-base pattern has formed just beneath the $290 resistance zone. Earnings arrived during the consolidation period but did little to change the equilibrium. Apparently, all we needed was the 20-day moving average to catch up because now that it’s done so, MSFT stock is resolving itself higher.

I consider Friday’s ramp the trigger we needed for new bull plays. A push to $300 now seems inevitable.

The Trade: Buy the October $290/$300 call vertical for $4.60.

Tech Stocks to Buy: Alphabet (GOOGL, GOOG)

Alphabet (GOOGL, GOOG) stock chart with high base breakout pattern

Source: The thinkorswim® platform from TD Ameritrade

Alphabet rounds out today’s trio of tech stocks with a tempting breakout pattern of its own. The search giant is up 57% on the year and just destroyed earnings estimates with last month’s quarterly report. With the robust numbers behind its back and a consistent uptrend in place, this is an easy setup to pull the trigger on.

Over the past three weeks, prices have been consolidating above a rising 20-day and 50-day moving average. With the 20-day nearly caught up to the price, now is the perfect time for buyers to press their advantage. The high of the base confirms resistance is near $2,765. That’s the level that needs to be taken out to confirm the breakout is here.

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If the high cost of GOOGL shares gives you pause, try using call spreads instead.

The Trade: Buy the $2,800/$2,850 call vertical for $19.

For less than the price of a single share, you’re entering a position with the potential to more than double your money if Alphabet climbs to $2,850 by expiration.

On the date of publication, Tyler Craig did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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