I love Microsoft (MSFT) and will be involved with this stock once the virus is gone. Today with the stock down I did a Buy-Write. I bought 1000 shares of the stock at $149.50 and sold a $150 Call to expire today.
Buy 1000 Shares MSFT @ $149.50
Sell to Open 10 MSFT 3/27/20 $150.00 C @ $1.75 ($1750)
I got into this position to get assigned. I hope the stock closes above $150 today. If this happens I’ll make 50¢ on the stock for $500, and I’ll keep the $1750 premium. This would be a great 1 day trade.
If the stock falls below my $150 Strike Price I’ll keep my stock because I won’t get assigned, and I will also keep the $1750 premium.
My concern, with any trade in place, is that the Senate is dealing with the stimulus package, and it might go up for vote today. Either way this will move the market. My other concern is today is Friday; what the close will look like is anyones guess. I feel the market will drop going into the close, unless they pass the stimulus close to the end of the trading week. If the market drops my 1000 shares of MSFT will drop, and who knows how long it will stay down. But being in this trade there’s no other stock I’d rather be in.
Because of these concerns I give this trade a Risk Factor 3. If it looks like MSFT will close below my Strike I might get another Call sold right at the close. This would be a Call to expire next Friday.
As I’m writing MSFT is moving higher.
Successful Trading,
Steve
The Options Coach