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) July, 2018 $90-$95 in-the-money vertical BULL CALL spread at $4.00 or best
Opening Trade
5-31-2018
expiration date: July 20, 2018
Portfolio weighting: 10%
Number of Contracts = 25 contracts
I don't know why Microsoft is going up right now, despite the rest of the world going to hell in a handbasket and the main market going nowhere..
Maybe it's the Recode conference in Palos Verdes which has been highlighting the specular growth coming for all of tech.
Maybe there is just nothing else to buy.
Perhaps with its huge cash mountain it is a beneficiary of rising interest rates. Or, the massive share buyback program could be getting aggressive. Or maybe just everybody in the world wants to get in.
There is no doubt that CEO Satya Nadella has breathed new life into the Microsoft (MSFT) company, building on already strong fundamentals, turning the company on a dime and headlong into the cloud business. All of a sudden, Microsoft has gone from a legacy tech company to a cutting edge one.
Cloud services is going gangbusters and is now up to $21 billion a year in annualized revenues. By 2020 it should hit $30 billion, challenging Amazon's $50 billion AWS annual cloud income.
It has been the faster grower in cloud services for the past five quarters. Their one big disaster, their attempt to enter the mobile business through its acquisition of Nokia for $7.2 billion in 2014, is now well behind it.
They are a huge beneficiary of the new tax bill. Not only can they repatriate billions in past profits from overseas at a generous tax rate, they are getting a boost from the first year 100% write off of new capital spending.
I'm targeting $120 a share, which will give it a $925 billion market capitalization.
Don't pay more than $4.25 for this position or you'll be chasing.
If you don't do options, close your eyes and buy Microsoft shares outright.
Here are the specific trades you need to execute this position:
Buy 25 July 2018 (MSFT) $90 calls at................$10.50
Sell short 25 July 2018 (MSFT) $95 calls at..........$6.50
Net Cost:............................................................$4.00
Potential Profit: $5.00 - $4.00 = $1.00
(25 X 100 X $1.00) = $2,500 or 25.00% in 35 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, 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 Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.