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 2022 $200-$210 in-the-money vertical Bull Call spread at $8.80 or best
Opening Trade
5-18-2022
expiration date: June 17, 2022
Portfolio weighting: 10%
Number of Contracts = 12 contracts
If you don’t do options, buy the stock. My target for (MSFT) over the next year years is $350, up 40%.
With the Volatility Index (VIX) approaching $30 today, it’s time to start loading the boat with risk again. Today, you can add call spreads that are so far in the money that it is almost impossible to lose money.
I love Microsoft for the long term. So, I am going to use today’s 1,000 meltdown in the Dow to add a position with a one-month view.
To lose money on this position, (MSFT) would have to drop an unbelievable 40% from the January high in only five months. You would need a crash of Biblical proportions, on the scale of the 1987 crash, which the current state of the economy doesn’t justify.
This is another opportunity to buy Cadillacs at Ford Focus prices.
I am therefore buying the Microsoft (MSFT) June 2022 $200-$210 in-the-money vertical Bull Call spread at $8.80 or best.
Don’t pay more than $9.20 or you’ll be chasing on a risk/reward basis.
This is a bet that Microsoft will not fall below $210 by the June 17 option expiration.
Here are the specific trades you need to execute this position:
Buy 12 June 2022 (MSFT) $200 calls at………….………$58.00
Sell short 12 June 2022 (MSFT) $210 calls at……….…$49.20
Net Cost:………………………….………..………........….….....$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(12 X 100 X $1.20) = $1,440 or 13.64% in 20 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.
