Trade idea
MSFT strangle
The speaker suggests that the strangle on Microsoft (MSFT) is currently profitable and advises exiting the trade before earnings, as volatility is expected to increase significantly around the earnings date. The rationale is that the earnings period will likely cause a spike in volatility, making the strangle less effective. The speaker also recommends taking partial profits and exiting the trade before the earnings announcement to avoid potential losses.
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Strategystrangle
Assetequity
ExpirationAugust 21st
Time horizonShort-term (1-2 weeks)
Entry / triggerCurrent price level
Target / exit26% profit
Invalidation / stopEarnings date (July 29th) and volatility changes
SpeakerSam from Miami
Structure / legs- put strike 325
- call strike 450
Risks- Earnings may result in a significant price movement that invalidates the strangle
- Volatility may not increase as expected, reducing the trade's effectiveness
Trade idea
MSFT options trading
The speaker believes that software stocks, such as Microsoft, offer more tangible opportunities for growth compared to Bitcoin. This is based on the idea that software stocks have already experienced significant growth and may have more room for further appreciation. The speaker suggests that the market may not validate long-term predictions as expected, but the potential for capital appreciation remains.
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Strategyoptions trading
Assetstock
Time horizonShort to medium term
Entry / triggerIf the market shows continued interest in software stocks and the stock price is undervalued relative to its fundamentals
Target / exitPotential for capital appreciation based on the company's growth prospects and market position
Invalidation / stopIf the stock underperforms due to market conditions or a decline in the company's fundamentals
SpeakerParticipant 1
Risks- Market volatility
- Regulatory changes affecting the software industry
- Underperformance due to macroeconomic factors
Trade idea
Microsoft Sell a call spread with strikes 535 and 545
The trade is based on the expectation that the stock will not move significantly beyond the strike prices
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StrategySell a call spread with strikes 535 and 545
AssetEquity
ExpirationNot specified
Time horizonShort-term
Entry / triggerStock price is near all-time highs
Target / exitCollect around $1.10 to $1.15
Invalidation / stopIf the stock moves significantly higher or lower
SpeakerTom Sausnoff
Risks- If the stock moves beyond the strike prices, the trade could result in a loss
Trade idea
MSFT Buy on pullbacks
The speaker suggests that Microsoft may present a buying opportunity following a pullback, given the perceived overvaluation and the tendency of investors to repurchase after selling. This implies a potential short-term reversal or consolidation phase.
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StrategyBuy on pullbacks
AssetEquity
Time horizonShort-term
Entry / triggerPotential pullbacks following overvaluation concerns
Target / exitNot specified
Invalidation / stopNot specified
SpeakerSpeaker
Risks- Market volatility
- Overvaluation may persist
- Lack of clear entry point
Trade idea
Microsoft broken wing butterfly
A broken wing butterfly is proposed for Microsoft, with the long legs at 345 and 315 strikes, and the short leg at 335. The trade is expected to profit from a limited downside move, with a small credit of 30-35 cents. The strategy is designed to capitalize on a potential 90% pop and 100% IVR, with low risk and low reward. The trade is suitable for a short-term horizon, with the expectation that the market will move within a narrow range.
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Strategybroken wing butterfly
Assetstock
ExpirationAugust
Time horizonshort-term
Entry / triggerMicrosoft trading at 385
Target / exit42
Invalidation / stop345
SpeakerScott
Structure / legs- 345 strike
- 335 strike
- 315 strike
Risks- limited upside potential
- risk of market movement beyond expected range
Trade idea
Microsoft put ratio spread
The speaker discusses a put ratio spread on Microsoft, which involves buying one put and selling two puts at a higher strike price. This strategy is used to profit from a decline in the stock price while limiting risk. The speaker mentions that this trade is part of a broader set of strategies, including a diagonal spread on Nvidia and a broken wing butterfly on the S&P. The put ratio spread is considered a 50/50 shot, with the potential for profit from the premium collected on the sold puts.
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Strategyput ratio spread
Assetstock
ExpirationJuly
Time horizonshort-term
Entry / triggermarket down
Target / exitprofit from premium
Invalidation / stoploss if market moves against the position
SpeakerTom
Risks- loss if the stock price rises
- limited profit potential
- time decay can reduce profitability
Trade idea
Microsoft covered call
The speaker suggests that for a Microsoft position already held, selling a covered call at the money is preferable if the trader is bullish and wants to keep the stock. If the trader is less bullish but still wants to hold the stock, selling a covered call out of the money is recommended. The reasoning is that at-the-money calls provide more premium, while out-of-the-money calls offer more room for the stock to move upward.
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Strategycovered call
Assetstock
Time horizonshort-term
Entry / triggerMicrosoft stock position already held
Target / exitmaximize premium or give room for upside
Invalidation / stopif Microsoft stock moves significantly upward and the trader is willing to lose the stock
SpeakerTony
Structure / legs- covered call on Microsoft position
Risks- Potential loss of upside if the stock moves significantly upward
- Premium received may be lower if the call is out of the money
Trade idea
Microsoft Shorting Microsoft with a cover at the opening
The speaker sold Microsoft and covered it at the opening price, indicating a short position. The trade was considered a 'nice trade' based on the price movement and execution. The speaker's action suggests a short-term strategy with a focus on the opening price as the entry point.
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StrategyShorting Microsoft with a cover at the opening
AssetEquity
Time horizonNot explicitly stated
Entry / triggerOpening price
Target / exitNot explicitly stated
Invalidation / stopNot explicitly stated
SpeakerS0001
Risks- Price movement against the short position
- Execution risk at the opening
Trade idea
Microsoft sell on rallies
The speaker is bearish on Microsoft at the current level, having been bearish at 430 and now at 420. The speaker suggests selling on rallies, indicating a short-term bearish bias. The rationale is that the stock has gotten ahead of itself, and the speaker believes it is overvalued. The invalidation level is a continued rise above 430, which would suggest the stock is not overvalued and the bearish thesis is incorrect.
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Strategysell on rallies
Assetstock
Time horizonshort-term
Entry / triggerprice rallies to 430 or higher
Target / exitprice reverts to 420 or lower
Invalidation / stopprice continues to rise above 430
SpeakerJay
Risks- Market volatility
- Unexpected positive news
- Liquidity issues
Q&A
What is your theory about Microsoft and the Oracles, the software side? Are they going to get eaten up by the AI move or is Microsoft just as solid as they ever been?
The speaker suggests that Microsoft is too big to fail and that there is not a lot of risk in Microsoft. However, they acknowledge that Oracle has been heavily impacted by the AI move and has taken a larger hit than Microsoft. The speaker is not certain about the future performance of either company but feels that both are in reasonable positions given their recent declines.
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Actionable takeawayBoth Microsoft and Oracle have been impacted by the AI move, but Microsoft is considered more stable. The speaker is not certain about their future performance but believes both are in reasonable positions.
Q&A
What is the current state of the market?
The market is experiencing mixed performance, with some indices like the Nasdaq and S&P 500 showing declines, while others like Bitcoin and Ethereum are rising. The speaker notes that the market is in a rotation phase, with certain stocks like Apple, Amazon, and Microsoft performing well while others like AMD and Microsoft are underperforming.
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Actionable takeawayThe market is in a rotation phase, with certain stocks outperforming others. Investors should be aware of the mixed performance and consider the rotation in their trading strategies.
Q&A
When should I take my strangle off?
The speaker advises exiting the strangle before the earnings date, as volatility is expected to increase significantly around the earnings period. The optimal time to exit is before the earnings announcement, ideally within a few days.
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Actionable takeawayExit the strangle before the earnings date to avoid potential losses from increased volatility.
Q&A
How can one construct a trade for Apple and Microsoft given their IV levels?
The speaker suggests using a poor man's covered call strategy for Apple by buying a long-term LEAP at the money and selling a front-month call. For Microsoft, the speaker is not long and suggests a long-term trend-following strategy instead of selling puts.
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Actionable takeawayUse a poor man's covered call for Apple and consider a long-term trend-following strategy for Microsoft.
Q&A
Tom, are you doing anything in Microsoft with the stock up 2% today?
The speaker is considering a short position in Microsoft, but is not yet committed. They plan to short Microsoft if the stock reaches $500 before the show ends.
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Actionable takeawayConsider shorting Microsoft if the stock reaches $500 before the show ends.
Q&A
What was your thinking behind the trades on Meta and Microsoft before their earnings?
The speaker discussed placing trades on Meta and Microsoft ahead of their earnings. For Microsoft, a broken wing butterfly was used to capitalize on volatility, while for Meta, a naked strangle was sold to profit from expected volatility normalization post-earnings.
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Actionable takeawayTraders can use volatility strategies like strangles and butterflies to profit from mispriced options ahead of earnings events.
Q&A
What is the expected move for the stock?
The expected move is around $28.
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Actionable takeawayThe expected move is a key factor in determining the trade's potential profitability.
Q&A
What is the speaker's opinion on Microsoft's stock price?
The speaker believes Microsoft's stock is overpriced and that investors often experience seller's remorse, leading to rapid repurchases after selling.
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Actionable takeawayInvestors should be cautious about overvalued stocks and consider the potential for rapid price reversals.
Q&A
Are we buying the dip on Microsoft?
The speaker is cautious about buying Microsoft, noting that the market is long on Microsoft due to its poor performance. They suggest buying Microsoft around $365, but with a note of caution, and are not buying into a NASDAQ rally.
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Actionable takeawayThe speaker advises caution when considering buying Microsoft, suggesting a potential entry point but with a warning against overconfidence in the broader market rally.
Q&A
What is the expected move for Microsoft?
The expected move for Microsoft is down to 345, with a potential upside of $42.
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Actionable takeawayThe expected move for Microsoft is down to 345, with a potential upside of $42.
Q&A
Should I sell a covered call on my Microsoft position at the money or out of the money?
The speaker suggests selling a covered call at the money if the trader is bullish and wants to keep the stock. If the trader is less bullish but still wants to hold the stock, selling a covered call out of the money is recommended. The reasoning is that at-the-money calls provide more premium, while out-of-the-money calls offer more room for the stock to move upward.
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Actionable takeawayFor a Microsoft position already held, selling a covered call at the money is preferable if the trader is bullish and wants to keep the stock. If the trader is less bullish but still wants to hold the stock, selling a covered call out of the money is recommended.
Q&A
Is selling puts in Microsoft and Oracle a smart strategy?
The speaker acknowledges that selling puts in Microsoft and Oracle is a strategy that can capture a portion of the premium, but the effectiveness depends on market conditions. The speaker suggests that the trade should be flexible and adjusted based on market movements, rather than being a binary outcome.
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Actionable takeawaySelling puts in Microsoft and Oracle can be a viable strategy to capture premium, but it requires flexibility and adjustment based on market conditions.