Outlook: Bullish
Target: ~$32 by End of January
Strategy: Bull Put Spread
Bought 29.5 January Strike @ 0.60
Sold 32 January Strik @ 0.05
Maximum Risk: $55*
Maximum Profit: $195
This is a good trade'“ almost 4:1 R:R. My emotional outlook for MSFT was bearish at first. It has a tendency to underperform. I was looking to do a Bear Put Spread at first but decided to follow the trend.
My overall technical analysis of the stock shows it is still currently in a bullish trend. How long? Probably till Vista comes out'“late this year, early next year. Earning is due this month as well which will make or break this trade. Assuming public reception of earnings is good, the stock will most likely break its resistance at $30 by December combined with Vista release.
Public sentiment seems to be split 75:25 favoring a bullish position based on options volume for January 2007.
* Per contract. Excludes commisions.
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