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) November 2022 $210 - $215 in-the-money vertical BULL CALL spread at $3.73
Opening Trade
10-26-2022
expiration date: November 18, 2022
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Off a poor earnings report, I will buy the dip in Microsoft (MSFT) like most others.
This is a 23-day bet that MSFT will stay above $215.
Any meaningful pop, I’ll take profits.
This is a favorable risk-reward scenario after (MSFT) opened the day down around 8%.
More aggressive traders can roll up strikes to $220.
Here are the specific trades you need to execute this position:
Buy 25 November 2022 (MSFT) $210 calls at………….………$24.43
Sell short 25 November 2022 (MSFT) $215 calls at………….$20.70
Net Cost:……………………..…….………...........................…….....$3.73
Potential Profit: $5 - $3.73 = $1.27
(25 X 100 X $1.27) = $3,175 or 34.05% for 23 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.
