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.
Trade Alert - (MSFT) –BUY
BUY the Microsoft (MSFT) May 2021 $230-$240 in-the-money vertical Bull Call spread at $9.30 or best
Opening Trade
4-28-2021
expiration date: May 21, 2021
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Stock players should go ahead and buy the shares, which probably have a double in them over the next three years.
After a grinding eight-month-long correction, technology stocks have suddenly returned from the dead. All the best names gained 10% or more in the previous four-day holiday shortened week. Clearly, investors have itchy trigger fingers with tech stocks at these levels.
The Q1 earnings, which were almost perfect, has prompted a 3% selloff and created another entry point for the shares.
This is great news because technology stocks are to the core to all non-indexed retirement funds.
Microsoft held up better than any major tech stock. It is therefore most likely to deliver an upside breakout to new all-time highs first.
I am therefore buying the Microsoft (MSFT) May 2021 $230-$240 in-the-money vertical Bull Call spread at $9.30 or best.
Don’t pay more than $9.50 or you’ll be chasing.
This position also gets huge downside protection from downside support by the 200-day moving average at $242.58.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.
This is a bet that Microsoft (MSFT) will not trade below $240 by the May 21 option expiration day in 12 trading days.
Here are the specific trades you need to enter this position:
Buy 12 May 2021 (MSFT) $230 calls at………..….………$25.00
Sell short 12 May 2021 (MSFT) $240 calls at……….…..$15.70
Net Cost:……………………..…….………..…………........….....$9.30
Potential Profit: $10.00 - $9.30 = $0.70
(12 X 100 X $0.70) = $840, or 7.52% in 12 trading days.
If you are uncertain about how to execute an options spread, please watch my training video 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.
