Trade Alert - (MSFT) July 31, 2019

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 Trade Alert - (MSFT) - BUY

BUY the Microsoft (MSFT) September 2019 $120-$125 in-the-money vertical BULL CALL spread at $4.40 up to $4.60

Opening Trade

7-31-2019

expiration date: September 20, 2019

Portfolio weighting: 10%

Number of Contracts = 22 contracts

The U.S. central bank delivered a quarter-point rate cut and Microsoft (MSFT) and the broader economy is chugging along nicely with an exploding cloud business and historic low unemployment rates.

This is a bet that Microsoft (MSFT) will not trade below $120 by September 20.

If you don’t do options, buy the stock outright.

(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.

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.

I have another six stocks like this that I will be issuing trade alerts in a similar scenario.

Here are the specific trades you need to execute to obtain a $10,000 position.

Don’t pay more than $4.60 or you’ll be chasing:

Buy 22 September 2019 (MSFT) $120 calls at………….………$18.70

Sell short 22 September 2019 (MSFT) $125 calls at………….$14.30

Net Cost:……………….................………….………..………….….....$4.40

Potential Profit: $5.00 - $4.40 = $0.60

(22 X 100 X $0.60) = $1,320 or 13.20% in 51 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.

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