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) February 2022 $240-$250 in-the-money vertical Bull Call spread at $8.80 or best
Opening Trade
1-25-2022
expiration date: February 18, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
I love Microsoft for the long term.
We have just seen the market perform another perfect 700-point swan dive. So, I am taking profits on one of my many short positions to free up more cash to buy free money longs which currently abound.
Although I expect this market selloff to continue for weeks, if not months, the biggest declines are behind us. When markets bottom out, the big money will pour back into the best quality names, especially Microsoft.
I am therefore buying the Microsoft (MSFT) February 2022 $240-$250 in-the-money vertical Bull Call spread at $8.80 or best
Don’t pay more than $9.40 or you’ll be chasing on a risk/reward basis.
This is a bet that Microsoft will not fall below $250 by the February 18 options expiration.
Here are the specific trades you need to execute this position:
Buy 12 February 2022 (MSFT) $240 calls at………….…...……$42.00
Sell short 12 February 2022 (MSFT) $250 calls at………….…$33.20
Net Cost:………………………….………..…………...................….....$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440 or 13.63% in 17 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.
