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Microsoft (NASDAQ:MSFT) has been a part of the Strategic Trader portfolio in one form or another — put writes, long stock positions, covered calls — since May.
We recently had our stock position from called away from us when a covered call we sold expired in-the-money, but we’re not ready to see MSFT move out of our portfolio for good.
In fact, we want to take another bullish position, and selling a put write on MSFT gives us an excellent opportunity to generate some additional income this month.
We are not the only traders who are currently bullish on MSFT. The rest of the market is so bullish on MSFT that last Friday the stock briefly surpassed Apple (NASDAQ:AAPL) as the most valuable U.S. company by market cap.
Market cap is the total value of a company, and it’s calculated by multiplying the number of shares of stock by the value of each share.
AAPL quickly regained the title of most valuable company again on Monday after its 3.5% gain, but in a maturing bull market where traders are wondering where to put their money, plenty are still choosing MSFT.
One of the reasons investors are so enthusiastic about MSFT is that it is a growth stock that pays a strong dividend. MSFT declared a $0.46/share quarterly dividend last week. Not all technology companies pay dividends, but investors love that MSFT does.
Looking at the chart of MSFT, you can see the stock just broke above resistance at $112 yesterday. We expect the stock to remain above this level as it challenges its early October high of $116.18.
We think selling puts on the stock is a good way to generate income through the end of the year.
And if the puts we sold end up in the money at expiration, we’d be happy to own shares of MSFT again.
To find out which naked puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today.
InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.
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