I’m opening a bullish position in MSFT.

music selection:  “Red Stars” — The Birthday Massacre

weigh-in:  221.4 (0.8)

First the closed positions.  A bull call spread in CMCSA expired in the money over the weekend.  I earned 432 in profits on 1,368 capital at risk.  That was good for 32% over 40 days or 288% annualized return.  A short put in ITB also expired worthless over the weekend.  It earned 3% over 26 days or about 42% annualized.

I am giving up on my DHI bull call spread.  After 8 days it went from being at the money to 6.28% under water.  I didn’t like the chart any longer so decided to cut my losses.  I had 1,883 capital at risk and took a loss of 693 or about 37%.

Finally, the bull call spread in MSFT.  I don’t think the company or its stock performance needs much introduction.  I like them as a growth business driven by moves into SaaS and cloud infrastructure.  I bought the 225/230 BCS with 16OCT2020 expiry for 2.49 a share.  I need shares to rise 1.43% over 47 days to earn the maximum profit.  That would be 2,510 on 2,490 capital at risk, good for 101% or 783% annualized.  I like my chances here with a great deal of leverage on a hot chart and hot stock.

Devour your prey raptors!

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Bull call spread with yield up to 783%

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4 thoughts on “Bull call spread with yield up to 783%

  • September 1, 2020 at 9:14 pm
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    I like MSFT too, and suspect they may deliver an earnings surprise similar to Salesforce’s in the near future. In the long run, they’re going to do to Zoom and Salesforce what they did to WordPerfect and Netscape.

    Reply
    • September 1, 2020 at 11:46 pm
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      Chris,

      I think there is a lot to be said for buying and holding MSFT, maybe with a deep out of money covered call for juice. But this is a short term play. I want to make an outsized profit off a small short term move and the chart looks good for that right now.

      Reply
  • September 7, 2020 at 5:11 pm
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    Too bad MSFT got decimated down to ~205. You calls still have some days left in them though, best of luck!

    Reply
    • September 7, 2020 at 9:40 pm
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      I need 7.35% upside from here to max my profit. I’ll watch for a bounce on Tuesday to decide whether to exit early. I’m in a similar position in HD which took a similar dive.

      Reply

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