At the Financial Success Strategies teach-in at the Harvard Club Jim Cramer described this market of reminiscent of the 90s and that being the case the best way to trade large cap stocks in that market is utilizing deep in the money calls through January. Microsoft (MSFT) - Get Report , Boeing (BA) - Get Report and intel (INTC) - Get Report were examples Cramer used to illustrate his point. Follow is reasoning here and check back for more from the Financial Success Strategies tech in.
Partial Video Transcript:
This happens to be a classic year for stock picking. It's a classic year. There are some stocks that are doing so much better than others, that I think this strategy will work. I prefer you to buy the January deep in the money calls, try to go down two or three strikes and just trade around. We're going to see, between here and year-end, I think, days like Friday.
Where you will see a gigantic market cap company, like in Alphabet, go up huge. If you have deep in the money calls, maybe at the end of the day you sell a little common against it, you come in on Monday, maybe the market's down a little because something happened in Washington. You pick that off, you buy the common back - a little money that way and then you keep letting the call go up. Do not touch the calls. Let them ride into year end. That is what's gonna work.
I'll give you another example. Boeing. Best performing stock in the Dow. Now, not everybody's just gonna crowd into the Facebook's, all right? They're gonna want more than that. I think Boeing out three months and three strikes down, deep in the money calls. Let it lift. Sell common. Anyone see the way Boeing traded down two bucks the other day? On Thursday!
You'd sell the common and then you'd buy back the common and you keep the call. And Boeing is the kind of stock that goes up four, down two. I want you to play both the up four. I want you to play the down two. And I think that will work, between here and year-end, because what we have to do, is we take ... Not a 1999, but this is a 1992 to 1998 strategy. Because we are in that kind of market.
Watch the video for Jim Cramer's full comments.
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