Trade Update $MSFT: Closing Put Calendar for a Gain

by CC August 21, 2015 11:03 am • Trade Updates

Back on Aug 4th we legged into a bearish position in MSFT, financing the purchase of longer dated puts by selling shorter dated ones. To refresh, here was the trade & rationale:  

Trade: MSFT ($46.63) Buy to Open 1 Aug / Nov 45 Put Calendar for 1.40

Rationale: MSFT could join other stock in the PC chain in under-performing the broader market. However, with no catalysts until November expiration it makes sense to finance the purchase of November puts by selling the dog days of August with the August 45 put. If we do see continued consolidation we will be set up well and have a couple of different options to further spread the November puts.

At the time we highlighted the potential to once again spread the long Nov puts, but at this point we like the idea of taking some money off the table as the trade worked perfectly into August expiration without a ton of risk:

Action: Sell to close the MSFT ($44.90) Aug / Nov 45 Put Calendar at 2.15 for a .75 gain