Trade Alert - (MSFT) December 21, 2018 - STOP LOSS
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) – SELL-STOP LOSS
SELL the Microsoft (MSFT) January 2019 $90-$95 in-the-money vertical BULL CALL spread at $4.00 or best
Closing Trade
12-21-2018
expiration date: January 18, 2019
Portfolio weighting: 10%
Number of Contracts = 23 contracts
The market is absolutely under assault today, besieged by the imminent government shut down, trade wars, the General Mattis resignation, and rising interest rates. Microsoft has broken six-month support at $100.
I am therefore stopping out early to limit losses and selling the Microsoft (MSFT) January 2019 $90-$95 in-the-money vertical BULL CALL spread at $4.00 or best.
This was a bet that the Microsoft (MSFT) would not trade below $95 by the January 18 option expiration in 23 trading days.
If you have the stock, sell it for the short term but keep it for the long term. Microsoft is a major long-term winner.
(MSFT) easily has a double in it over the next three years. 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.
It’s 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.
Sell 23 January 2019 (MSFT) $90 calls at………….………$10.60
Buy to cover short 23 January 2019 (MSFT) $95 calls at….$6.60
Net Proceeds:………………………….………..………….….....$4.00
Loss: $4.40 - $4.00 = $0.40
(23 X 100 X $0.40) = $920.
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.