Thoughts of a mechanical engineer turned programmer turned statistical investor. Here to save you from making mistakes I made at the beginning of my investing career.

MSFT and V earnings tradeS!

Let’s add an earnings play on msft, which has come down already ~20% from its highs to 275$.

The trade is the following put ratio spread:

MSFT earnings trade

Statistically the trade has 82% probability of any profit, as long as MSFT is above 237$ on expiration, another 14% lower from here:

And the point of this trade is that I like MSFT as a company, if they do trade lower and my puts go ITM, first of all I’ll pocket 5k$ on the bear put spread (BPS) in addition to the 1250$ credit I already received for the position, but then I’ll roll the 250$ puts out to 2024 puts at a lower strike, and wait for the stock to go back up.

This is an example of how trading options in a high VIX situation combined with the increased volatility of earnings can make trading options a very powerful combination.

I also did a trade on V (visa), who are trading at $205 right now, down from 250$.

With 195$ being really the lowest they’ve been in a year, I feel comfortable selling the 195$ puts, and adding on top of that a 205-210 bull call spread (BCS):

This whole trade is a net credit of 300$, with the potential to make 2500$ if visa pops 5$ to 210$:

And the idea here is the same. Looking at the graph of V:

10 year graph of visa

Since the March 2020 covid scare, any time V came near the 190$ value, it pretty much flew up off of it. And just looking at the 10 year graph in general, this is a stock which any time it dipped it was a buying opportunity. So despite that I already have a (small) position, I’m happy to add a bit more considering the beneficial market environment.

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