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) May 2020 $155-$160 in-the-money vertical BULL call spread at $3.30
Opening Trade
4-21-2020
expiration date: May 15, 2020
Portfolio weighting: 10%
Number of Contracts = 29 contracts
Massive down day as the Nasdaq is freefalling off a cliff.
The action here is a continuation of closing the Yelp’s trade alert.
This is the second leg to my strategy of rolling Yelp’s equity proceeds into a Microsoft call spread.
There has been no bad news on Microsoft today whatsoever, but the stock is down 5%.
Markets are extremely volatile and it's important to use limit orders as option prices are whipping around.
The elevated implied volatility finally gives us a little bit of cushion on this call spread, the best prices are when volatility spikes, therefore, leave a limit order for the day.
The strike prices are relatively aggressive, and I would recommend risk adverse traders moving down strike prices $5 for each strike. If the underlying stock falls more, then moving strike prices a further $5 is a possibility.
If you don’t do options, buy and hold because Microsoft is one of the best generational tech plays you can buy.
Here are the specific trades you need to execute this position:
Buy 29 May 2020 (MSFT) $155 call at………….…….…$16.00
Sell short 29 May 2020 (MSFT) $160 call at……….….$12.70
Net Cost:……………………..…….………..……...................$3.30
Potential Profit: $5 - $3.30 = $1.70
(29 X 100 X $1.70) = $4,930 or 49.30% in 25 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 at
http://www.madhedgefundtrader.com/ltt-vbpds/
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.
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.
