Following the Nasdaq’s official drop into correction territory on Monday — which means the index closed more than 10% lower than its recent high — traders on Wall Street are rallying to buy the dip.

This move is sending stock prices higher and bond yields lower.

While this is great news for bullish positions, we fully expect more volatility to come.

That’s why we’re jumping to take advantage of this bounce with a new covered call trade on our newly acquired shares of Microsoft (NASDAQ:MSFT)

It’s most advantageous to sell call options when the underlying stock is moving higher because the call premiums are usually richer during bullish bounces.

MSFT dropped down to test down-trending support at $224 on March 4th, and the stock is now rising back up toward down-trending resistance at $236.

Daily Chart of Microsoft (MSFT) – Chart Source: TradingView

To take advantage of this bounce, we recommend selling to open a MSFT covered call with a mid-April expiration, as they are offering great premiums.

And we’re setting our strike price at the price where we had the shares of MSFT put to us last week.

We want to make sure we break even on our underlying stock position if the bullish bounce that started this week continues into a longer bullish rally.

On the date of publication, John Jagerson & Wade Hansen did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

John Jagerson & Wade Hansen are just two guys with a passion for helping investors gain confidence — and make bigger profits with options. In just 15 months, John & Wade achieved an amazing feat: 100 straight winners — making money on every single trade. If that sounds like a good strategy, go here to find out how they did it.