社区

On 1 Feb, I did a technical analysis and have the outlook that $Microsoft(MSFT)$ stock price is near the bottom of the uptrend trendline and potentially may stay above $400 before 7 Mar 2025. Therefore, I have opened a Bull Put Spread with strikes $395/$400, date of expiry 7 Mar 2025, for credit of $0.98. I’ll get to keep the credit if price stays above $400 on 7 Mar 2025. The total risk of this trade is $4.02 ($5 spread – $0.98 credit received), which is approx. 1% of my total capital.

Technical analysis for MSFT (Timeframe: Daily Chart)

Screenshot of my position captured on 1 Feb 2025

Here are my considerations for entering this trade as well as my plans to take care of my risk and rewards:

1.      Forming my outlook:

• Price has been generally trading sideways for the past few months.

• Currently, the price is near the bottom of a subtle uptrend line.

• William%R is suggesting that the price is at oversold region.

• The above observations give me a sideway-bullish outlook for MSFT.

2.      Taking care of my risk:

• If price does moves down, I think the potential support levels are $410, $405, $400 and $389, these are based on the recent candlestick lows.

• I plan to close or roll the trade if price drops below $400.

3.      Taking care of my reward:

• If the trade has achieved 50% of the credit before 14 Feb (Its valentine’s day 😊), I’ll close the trade.

• If the trade has achieved 70%-80%, I’ll close the trade too.

 Notice that I did not choose $398 as the short put of the bull put spread. This is because the credit collected is <$1 and I think it is not worth the risk.

Screenshot of the option analysis captured on 1 Feb. The price is usually not correct when market close.

In summary, I have a sideway-bullish outlook on MSFT. I shared the entry of Bull Put Spread and also shared my trade plan for the trade.

Comment below if you have any queries. Feel free to share with me if you have a stock in mind and like to use options for your trades. I may write an article of your stock for discussion and education within this community.

@ArcherWG @Aqa @CINDYTAN @DeltaDrift @Dan1192 @jace0777 @Kashcash @KSR @SPACE ROCKET @SPOT_ON @Terra Incognita @ZEROHERO

Happy trading 😊.