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) August 2020 $190-195 in-the-money vertical BULL call spread at $3.98
Opening Trade
7-23-2020
expiration date: August 21, 2020
Portfolio weighting: 10%
Number of Contracts = 24 contracts
This a bullish trade that Microsoft will stay above $195 by August 21st.
MSFT has technical support with the 50-day moving average at $195.
Microsoft had a great earnings report which was more of the same from what they have been doing. No surprise shares are up over 30% YTD.
Some of the highlights from the quarter include robust execution and better-than-expected demand from customers for commercial cloud offerings drove the quarterly results. Solid uptick in Teams on the back of coronavirus-led work-from-home, stay-at-home, telehealth and online learning wave, remained noteworthy.
Moreover, strong Commercial business positively impacted earnings and revenues. Commercial bookings increased 12% year over year (12% at cc), courtesy of robust renewal implementation and growth in big, long-term Azure contracts. Commercial remaining performance obligation came in at $107 billion, up 23% year over year at cc. Commercial revenue annuity mix was 94%, increasing 4% year over year, driven by ongoing shift to cloud infrastructure.
Commercial cloud revenues were $14.3 billion, surging 30% year over year (up 32% at cc).
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 24 August 2020 (MSFT) $190 call at………….………$19.30
Sell short 24 August 2020 (MSFT) $195 call at………….$15.32
Net Cost:………………….................…..…….………..…….....$3.98
Potential Profit: $5 - $3.98 = $1.02
(24 X 100 X $1.02) = $2,448 or 24.48% in 29 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 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.
