Microsoft Drifts Higher Ahead Of Earnings; Here's How An Options Earnings Play Could Net $200 | IBD | Summary and Q&A

TL;DR

A strategy called iron condor is recommended for Microsoft's upcoming earnings report, anticipating little movement in the stock.

Key Insights

• 📈 Microsoft stock has been trending upwards but is still in a downtrend overall.
• ❓ The stock has upcoming earnings, which can be a catalyst for price movement.
• ♻️ An iron condor options strategy is recommended to take advantage of the expected limited movement.
• 🧔 The strategy involves selling a bear call spread and a bull put spread.
• 🧡 Traders anticipate the stock to stay within a range after earnings.
• ♻️ The profit zone for the iron condor trade is between $228 and $254.50.
• ✳️ The maximum risk in the trade is $300.

Transcript

foreign Traders for today's trade we're looking at an iron Condor option play in technology Giant and DOW Jones component Microsoft the stock has been drifting higher alongside the overall Market since putting in a low on January 6th shares have reclaimed their 21 day line and their 50-day line as well but the stock has been a significant downtrend... Read More

Questions & Answers

Q: What is an iron condor strategy?

An iron condor is an options trading strategy that involves selling a bear call spread and a bull put spread, with the expectation of limited stock movement.

Q: Why is Microsoft stock considered for an iron condor trade?

Microsoft stock has upcoming earnings that can be a catalyst for a significant price move. Traders anticipate little movement and want to profit from time decay.

Q: What is the profit zone for this iron condor trade?

The profit zone for this iron condor trade ranges between a stock price of $228 and $254.50, calculated by adding or subtracting the received premium from the short strikes.

Q: What is the maximum risk in this iron condor trade?

The maximum risk in this trade is $300. If the stock moves beyond the expected range, the trade will suffer losses.

Summary & Key Takeaways

• Microsoft stock has been steadily rising but is still in a downtrend and has upcoming earnings.

• An iron condor strategy is suggested to take advantage of the expected range of movement.

• The strategy involves selling a bear call spread and a bull put spread, with a limited maximum loss potential.