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) June 2019 $110-$115 in-the-money vertical BULL CALL spread at $4.50 or up to $4.70
Opening Trade
5-14-2019
expiration date: June 21, 2019
Portfolio weighting: 10%
Number of Contracts = 22 contracts
I think the market has dropped far enough and volatility is still high enough that what I call “free money trades” are starting to set up in the options market in the highest quality names.
I figure that in worst case, a delay of only months in the China trade deal is worth about $2,250 of downside in the Dow average. So far, we have suffered $1,400 of downside.
That will remain true as long as the Fed keeps interest rates unchanged, a far larger certainty now that the stock market is falling and the trade war has escalated.
I also like the idea of going long into the June 28-29 G-20 meeting in Osaka, Japan the next opportunity for a Trump-Xi meeting. Speculation of a deal will be rife then and the market should rally into it.
Therefore, I am buying the Microsoft (MSFT) June 2019 $110-$115 in-the-money vertical BULL CALL spread at $4.50 or best.
Don’t pay more than $4.70 or the risk-reward will turn against you.
This is a bet that Microsoft (MSFT) will not trade below $115 by the June 21 option expiration in 28 trading days.
If you don’t do options, buy the stock outright.
If you want to be more aggressive you can buy the June 2019 $115-$120 in-the-money vertical BULL CALL spread at $4.00 for a 20% profit.
(MSFT) easily has a double in it over the next three years. It is rapidly gaining market share in the burgeoning Internet cloud at the expense of leader Amazon (AMZN). (MSFT) has also successfully converted its business model from a one-time only software sale to an immensely profitable annual subscription service.
Its CEO Satya Nadella is a genius and is responsible for the turnaround of Microsoft over the last four years. We have already earned a double in the share price off the back of his Herculean efforts.
I have another six stocks like this that I will be issuing trade alerts for the next time the market gives us a substantial dip.
Here are the specific trades you need to execute to obtain a $10,000 position.
Buy 22 June 2019 (MSFT) $110 calls at………….………$15.10
Sell short 22 June 2019 (MSFT) $115 calls at..……….$10.60
Net Cost:………………………….………..……......…….….....$4.50
Potential Profit: $5.00 - $4.50 = $0.50
(22 X 100 X $0.50) = $1,100 or 13.63% in 28 trading 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.
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.
