EOT Trade Alert – July 17, 2015

Trade Alert:

Buy MSFT August 21st 2015 $47.00 calls at $1.05 or better

 

Company Background:

Microsoft (MSFT) manufactures, licenses, sells, and supports software products.

 

Short-Term Catalyst:

Microsoft is set to report earnings next week.

The price performance and analyst coverage of the stock has been mixed since they last reported quarterly earnings.  But I’m expecting them to deliver a solid earnings beat for their fiscal Q4.

Their business is moving in the right direction and they have one of the biggest share buyback plans around.  Management will find a way to beat the analyst estimates.

Here’s the thing that makes this trade exciting…

The chart of MSFT has formed a double top over the last several months.  MSFT made a high of $49.00 back in November 2014 and again in May of 2015.

Now that double-top is quickly turning into a bullish cup and handle formation.

At the very least, I expect MSFT to retest $49.00.  And if their earnings trigger a breakout, then MSFT could be north of $50.00 is short order.

Let’s grab call options on MSFT now to profit from this bullish technical setup.

 

Trade Details:

Underlying Stock Symbol:	MSFT
Current Bid-Ask Price:	$1.00- $1.02
Option “Buy Up To” Price:	$1.05
Break-Even On Stock At Expiration:	$48.05
Maximum Risk Per Contract:	$105

 

Exit Strategy:

MSFT is trading at $46.37 per share.  Resistance levels will be at $49.00 and again at $50.00.  Remember, we want this stock to move higher.  Support levels will be at $44.00 and $42.00. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.

 

Chart:

 

Category: EOT Trade Alert