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) – SELL – TAKE PROFITS
SELL TAKE PROFITS Microsoft Corporation (MSFT) May 2020 $155-$160 in-the-money vertical BULL call spread at $4.43
Closing Trade
4-29-2020
expiration date: May 15, 2020
Portfolio weighting: 10%
Number of Contracts = 29 contracts
We are accruing 66.5% of the maximum profit or a whopping 32.77% in our deep-in-the-money Microsoft bull call spread by coming out here.
This trade has been an absolute home run when we called the risk-off day in the oil unwind trade on April 20th by buying an aggressive call spread that was just 2% in-the-money at the time of purchase when the underlying stock Microsoft cratered to $166.
The stock popped after that staying above the $170 support level for good.
The underlying stock is over $174 as we speak and honestly, the stock has had tough sledding the past few days failing to break through $178 with a disappointing -2% performance yesterday.
I feel the stock is somewhat exhausted unable to generate new incremental highs in the short-run.
Although I am highly convinced that Microsoft will produce spectacular earnings (which is after the bell today) relative to the tech sector with outperforming drivers including their in-work chat app Teams, cloud engine Azure, and their office utility Microsoft 365, I have just added a risk-on Akamai position which appears less pricy (in relative terms) now than Microsoft as Microsoft’s shares have faced an uphill climb in the high $170s.
That being said, I wouldn’t be surprised at all if Microsoft receives the same 8% updraft that Google received from their earnings results because FANGs have established themselves as the stickiest services in the U.S. that consumers can’t live without and their risk premium shows it.
The tech portfolio is now in the green for the year with tech powering us out of the red. Great job!
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Here are the specific trades you need to execute this position:
Sell 29 May 2020 (MSFT) $155 call at…….............…….………$20.20
Buy to cover short 29 May 2020 (MSFT) $160 call at………….$15.77
Net Proceeds:……………………..…….……...................…..…….....$4.43
Profit: $4.43 - $3.30 = $1.13
(29 X 100 X $1.13) = $3,277 or 32.77% in 9 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.
