Our Microsoft (MSFT) bull put spread is well out of the money. Since we have a net debit on the position, I am recommending we close the current spread for a few cents and open a new spread.
We are going a bit wider with this one – from 5 points to 7.5 points – increasing our capital requirement by $250 per spread but also allowing us to generate more income. This will turn our net debit into cash in hand.
You can enter today’s trade even if you were not in the previous one. Just be aware that we will be managing and tracking it based on the ongoing position.
If you are new to spread trading, please watch my Bull Put Spread Coaching Session before entering the trade.
Current Stock Price: $270.99
Net Debit: $0.57
- Buy to close the MSFT Jun Week Two (6/10) 255 Put for around $0.07
- Sell to close the MSFT Jun Week Two (6/10) 245 Put for around $0.01
- Set initial debit limit at $0.06, but adjust as needed to close today
- Sell to open the MSFT Jun Week Four (6/24) 252.50 Put for around $1.54
- Buy to open the MSFT Jun Week Four (6/24) 245 Put for around $0.84
- Set initial credit limit at $0.70, but adjust as needed
New Cash in Hand: $0.07