Trade Alert - (MSFT) April 18, 2019 - TAKE PROFITS - EXPIRATION

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 - EXPIRATION

EXPIRATION of the Microsoft (MSFT) April 2019 $108-$113 in-the-money vertical BULL CALL spread at $5.00

Closing Trade

4-18-2019

expiration date: April 18, 2019

Portfolio weighting: 10%

Number of Contracts = 22 contracts

note: if you do not receive the Mad Hedge Technology Letter you can upgrade here for only $1,997 by contacting customer support at support@madhedgefundtrader.com . The regular price is $3,000 a year.

What happens when QE comes back? You buy the QE beneficiaries of old. That includes big technology stocks, especially Microsoft (MSFT).

This was a bet that Microsoft (MSFT) would not trade below $113 by the April 18 option expiration in 15 trading days. It looks like we will close over $122.00 at the April options expiration at the close today.

There is nothing you need to do. The profit on this trade should be credited to your account and the margin freed up on Monday. Well done and on to the next trade.

With this expiration, you get to earn $880 or 8.69% in 15 trading days. With this expiration, the Mad Hedge Technology Letter goes to a 100% cash position.

If you bought the stock outright, sell it for the short term but hold it for the long term. (MSFT) has another double in it.

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.

Here are the specific trades you need to exit this position.

Buy 22 April 2019 (MSFT) $108 calls at………….………$17.00

Sell short 22 April 2019 (MSFT) $113 calls at………….$12.00
Net Proceeds:………………………….………..………….….....$5.00

Profit: $5.00 - $4.60 = $0.40

(22 X 100 X $0.40) = $880 or 8.69% in 15 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.