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) January 2023 $200 - $210 in-the-money vertical BULL CALL spread at $8.80
Opening Trade
1-4-2023
expiration date: January 20, 2023
Portfolio weighting: 10%
Number of Contracts = 11 contracts
Microsoft (MSFT) was downgraded to neutral this morning, hence the 5% selloff in the underlying shares.
Growth in Azure, MSFTs cloud computing business, may be slowing faster than investors anticipate because of a maturing market as well as a tougher economic environment.
I am executing a mildly bullish short-term trade after this sharp drop.
This is a 16-day bet that MSFT will stay above $210.
Any meaningful pop, I’ll take profits.
I wouldn’t get too aggressive as tech is still in the penalty box for poor industry-wide growth.
I wouldn’t roll up strikes to at-the-money either because we are entering a treacherous January with many headwinds against tech.
Traders should be nimble and highly tactical in this volatile environment.
Here are the specific trades you need to execute this position:
Buy 11 January 2023 (MSFT) $200 calls at………….………$28.15
Sell short 11 January 2023 (MSFT) $210 calls at………….$19.35
Net Cost:……………………..……...................……..…..…….....$8.80
Potential Profit: $10 - $8.80 = $1.20
(11 X 100 X $1.20) = $1,320 or 13.63% 16 days
If you are uncertain on 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.
