This is a FullyInformed Members Microsoft Stock strategy article. Microsoft Stock trading symbol is (MSFT). Today Microsoft Stock was downgraded to underperform by Bank of America Merrill Lynch and the stock slid 1.64%. I received a lot of emails wondering if now would be a good time for covered calls. Many mentioned the Hide and Seek Covered Calls Strategy and others the Building Wealth Covered Calls Strategy.
The problem at this stage though is whether there is enough weakness in Microsoft stock to make selling covered calls the correct move. The problem with covered calls is once they are sold the investor is stuck at a specific valuation. If the stock comes roaring back they either have to buy back their covered calls, often for more than they sold them for, or let the stock go. There is nothing more annoying then selling covered calls, say for $38 on Microsoft Stock, and watch it turn right around and race back to $39 or $40.
Indeed the present weakness may find a lot of investors lurking and watching for a chance to jump into the stock having missed the last big run-up in Microsoft Stock. This will certainly commence another leg higher in Microsoft Stock.
This strategy article looks at a very simple covered calls strategy I have used for decades on stocks that I am not sure on the direction they will take. On one hand I want further gains in the stock if they are to be had, but at the same time I want to earn some income to help lower my overall cost in the stock in case it will move lower.
One stock this year I have used it on until just recently was Lowes Stock. I explain using this covered calls strategy on Lowes Stock in this same article.
Microsoft Stock Covered Calls Strategy Details
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