MSFT Collar Trade

As market drops aggressively based on the headlines, it always helps to consider which stocks could be a buy for a longer-term hold with minimal risk if possible. One idea to consider is Microsoft (MSFT).

Based on last Friday’s numbers, the stock could have been purchased at $386.80. A 395 call with a 390 put collar at the June expiration could have been bought for $3.54. If no adjustments are made to this trade, the net profit would be about $486 with a max risk of $34 (potentially less or 0 if dividends are received).  

For a high-priced stock like MSFT, I would consider this as an ok return. It is possible, that it could become something larger depending on how volatile the market remains. The short expiration could allow for rolling the position for additional credit.