MSFT - A Buying Opportunity?

Oct 27, 2020

MSFT

The Monday sell off on October 26th and awaited earnings on the 27th could present a buying opportunity for what I call a defensive tech stock. The $200 mark represents a psychological as well as proven technical support level.

I‘d consider two possible trades here;

Trade 1: Long MSFT @ $200

• Limit Order $200
  
• Stop Loss $189
  
• Take Profit $233
  
• R/R ratio 3:1
  
• Time horizon 1-2 months
  

Trade 2: Short DEC 18`20 200 P

Rationale:

• Generally positive analyst views (buy) with a $233 consensus target
  
• Stock has shown longerm (1y+) uptrend with some consolidation above $200
  
• Psychological & technical support at $200
  
• Additional long term support at $190
  
• Dynamic support around current spot levels ($210) held true after Monday sell off
  
• Signs of broken triangle post Monday could lead to short term decline, looking to buy the dip

Nov 2, 2020

Trade active

Trade opened by selling the NOV 20 200 PUT, a level where I am happy to own the stock.

The run up to the US elections has brought in some big vol. that positively impacted option prices.

I will keep a tight stop loss on that one but hope to keep the trade open to maturity to cash in the full premium.

Nov 6, 2020

Note

Break above long term uptrend and subsequent gap higher around US elections. Long term bull call remains intact, however expect short term vol. to remain until year end.

Eying to roll my put position at maturity.