AFter a massive gap higher on earnings, MSFT has gone nowhere for over a month. This is a classic PEAD (post earnings announcement drift) pattern, and I expect the stock to run to 57+
Here’s the trade:
Buy to Open MSFT Feb 55 Calls @2.00 or lower
Full Risk
Sell half at 57 per share.
I’m using Feb calls because that affords me plenty of time so if the stock continues to be rangebound for little longer I won’t have time decay risk.
And I’m using full risk because this feels like a stock that would shake me out under the “obvious” stop level only to reverse higher and breakout. If you want to adjust this trade, you can go half size here and then add to the trade if MSFT breaks 52.50 and reverses hard.