Trade Alert - (MSFT) April 6, 2020 - SELL-TAKE PROFITS
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) – TAKE PROFITS
Sell the Microsoft (MSFT) April 2020 $120-$130 in-the-money vertical BULL CALL spread at $9.90 or best
Closing Trade - NOT FOR NEW SUBSCRIBERS
4-6-2019
expiration date: April 17, 2020
Portfolio weighting: 10%
Number of Contracts = 11 contracts
I love taking a one-day profit.
I like even more buying one of the BEST stocks in America and then see the Dow Average rocket by 1,200 points the next day, and Microsoft up an eye-popping 8%.
It reaffirms once again my argument that the markets are paying you enormous premiums to carry risk over the weekend. “He who dares wins.”
Also helping all our positions is the dramatic 5.58% drop in the Volatility Index (VIX).
Stocks are soaring on falling death rates. Chinese cases are plunging after the border closure, Italy and Madrid are going flat, and San Francisco is looking good. There is still a massive, but extremely nervous bid under the market.
You don’t get any better quality than Microsoft (MSFT) in the tech world. It is the safest stock in which to invest today. This is a stock that you want to hide behind the radiator and keep forever. It is also one of the great turnaround stories of the decade. Microsoft was the only company that did not see a share price fall in Q1.
In addition, this particular combination of strikes prices gives you huge support at the 200-day moving average at $148.36. Please note this option spread will be profitable whether the market goes up, sideways, or down moderately over the next ten days.
I am therefore selling the Microsoft (MSFT) April 2020 $120-$130 in-the-money vertical BULL CALL spread at $9.90 or best. By coming out here you get to earn $1,100, or 11.23% in one trading day.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and lower your offer by ten cents with a second order.
This was a bet that Microsoft shares would NOT fall below $130.00 by the April 17 option expiration in 10 trading days, which would require it to fall to a new 2020 low.
Here are the specific trades you need to execute this position:
Sell 11 April 2020 (MSFT) $120 calls at…….…................…$42.00
Buy to cover short 11 April 2020 (MSFT) $130 calls at…….$32.10
Net Proceeds:……….………….…………..…..…..................….....$9.90
Profit: $9.90 - $8.90 = $1.00
(11 X 100 X $1.00) = $1,100 or 11.23% in one trading days.
The optics today look utterly different from when Bill Gates was roaming around the corridors in the Redmond, Washington headquarter and that is a good thing in 2018.
Current CEO Satya Nadella has turned this former legacy company into the 2nd largest cloud competitor to Amazon and then some.
Microsoft Azure is rapidly catching up to Amazon in the cloud space because of the Amazon-effect working in reverse. Companies don’t want to store proprietary data to Amazon’s server farm when they could possibly destroy them down the road. Microsoft is mainly a software company and gained the trust of many big companies especially retailers.
Microsoft is also on the vanguard of the gaming industry taking advantage of the young generation’s fear of outside activity. Xbox-related revenue is up 36% YOY, and its gaming division is a $10.3 billion per year business. Microsoft Azure grew 87% YOY last quarter.
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.
