When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Tech Alert - Microsoft Corporation (MSFT) - BUY
BUY Microsoft Corporation (MSFT) March 2020 $150-$155 in-the-money vertical BULL call spread at $4.20
Opening Trade
3-4-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
Joe Biden strengthened his position as the democratic nominee which is risk positive.
That was right on the heels of the central bank cutting rates by half a point means that there is a substantial chance of finding a short-term floor for tech stocks.
The volatility has been unnerving to many investors and so has the coronavirus fear mongering going on in the mainstream media.
Back to the specifics, Microsoft is down from its all-time high of $190 and this is a short-term trade that it won’t drop around 7% in the next 17 days.
Microsoft is not only the best stock in tech, but arguably the best stock in the universe and the next universe next to ours.
Microsoft’s run-up in the stock has been spectacular and heightened implied volatility in today’s trading means that getting into the crown jewels of tech is a no brainer.
They have already front-loaded the bad news by announcing they won’t meet its Q3 guidance for the More Personal Computing segment due to coronavirus-related impact to Windows OEM and Surface.
The company had guided $10.75-11.15B in revenue for the segment.
The risk/reward is favorable in this trade and if Microsoft can’t hold down the fort, who can?
Another interesting trade on the horizon is DocuSign post earnings report.
If you don’t do options, buy and hold the stock.
Here are the specific trades you need to execute this position:
Buy 23 March 2020 (MSFT) $150 call at………….………$18.40
Sell short 23 March 2020 (MSFT) $155 call at………….$14.20
Net Cost:……………………..…….………...................…….....$4.20
Potential Profit: $5 - $4.20 = $0.80
(23 X 100 X $.80) = $1,840 or 18.40% in 17 days
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Spread” by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
