Bullish long-term option trade on Microsoft

The past 4 sessions have been nothing less than a roller coaster ride of massive gains and losses on the US markets, mostly losses. The current market presents some great long term opportunities if you're not too worried about the events over the next few weeks up to the Fed decision in September to raise rates. One opportunity that looks very attractive right now is in Microsoft (MSFT). They recently released Windows 10 and have already had 75,000,000 installs and they are also executing on the Office 365 transition on all cylinders.

MSFT has a 52 week high of just under $49, and is currently trading in the low $41 range, which is a 16% pullback. There is also strong support at $39.50 where the stock has bounced off of that level 3 times now this year.

The longer term thesis on MSFT is solid when you look at the big picture PC, Xbox, and mobile platforms. Even today they are one of the only companies able to pull off a product strategy for gamers and the enterprise across three screens (TV, PC and smartphone). We see this trend continuing and even accelerating with Windows 10 and under the leadership of Nadella who succeeded Balmer.

To capitalize on the trend and to also try to circumvent the near-term volatility, we're putting on a longer term option position on MSFT.

Sell the Jan 2017 $30 Put for $1.65
Buy the Jan 2017 $43 Call for $3.90
Sell the Jain 2017 $50 Call for $1.75

The net cost on this trade is .50 cents per set of option contracts and you're risking .50 cents to make $7.00 if the stock is above $50 over the next 513 days. If the stock drops below 28.35, we may be forced to buy the shares at $30, or a net cost of $28.35, which is a 31% discount from today's trading price.