Microsoft Corp. (NASDAQ: MSFT) launched its Windows Phone at the end of the last decade... and just put the final nail in its coffin this year. Its would-be answer to iPhone and Android dominance just didn't catch on in the kinds of numbers a company like Microsoft needs to move the needle.
But it's trying again, and this time, it's taken a "if you can't beat 'em, join 'em" approach and partnered with Alphabet Inc.'s (NASDAQ: GOOGL) Google to bring a new smartphone and a whole slew of new personal tech devices to market.
I like what I see when I look at Microsoft's new offerings... and more importantly, I like what I see when I look at Microsoft's stock chart.
The stock hasn't moved much lately, which makes the play I'm going to recommend that much cheaper. Here's what's going on...
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Microsoft Smartens Up Its Smartphone Strategy
On Wednesday, Oct. 2, Microsoft debuted several new products at its annual hardware event. Among them was a new Surface laptop, an updated tablet, and a new set of Surface earbuds. But the biggest product reveal was the Surface Duo smartphone.
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The phone has two 5.6-inch screens connected by a 360-degree hinge, and when it's folded up, it can fit right in your pocket. It can run two different apps at the same time, or the second screen can be used as a game controller, keyboard, or a stand for watching videos.
Now, the phone may have surprised customers - but like I said, this isn't Microsoft's first venture into the smartphone space.
But instead of running on a Windows operating system, the Surface Duo will use the world's most popular operating system, Alphabet Inc.'s (NASDAQ: GOOGL) Android. According to Microsoft's product chief, Panos Panay:
"We're partnering with Google to bring the absolute best of Android into one product."
The Duo, available at the end of 2020 in time for the holiday season, comes at an interesting time for the smartphone market. Apple Inc. (NASDAQ: AAPL), one of the world's most popular smartphone makers, just launched its newest iPhone. But with little discernible differences from old models, the iPhone 11 didn't do much to impress customers.
The same can't be said for the Duo, with its double-screen look. Microsoft could have just brought the market the never-before-seen phone they've been waiting for... boosting its own stock in the process.
Microsoft shares are up around 26% year to date. In recent months, however, the stock has remained stagnant...
Even after the company impressed investors with an earnings beat, reporting $1.37 earnings-per-share compared to the $1.21 estimate from analysts, shares barely moved.
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But the Surface Duo might be exactly what the stock needs. And it's just the first product in a line of new innovations from Microsoft. According to CEO Satya Nadella:
"We believe the next decade will be about creation and amplifying what we can do as humans."
All of this spells the perfect time to get in on the popular tech stock.
There's just one problem. Microsoft is one of the most expensive stocks on the market, currently trading above $139 per share. Let's say you want control over 100 shares - it would cost you nearly $14 grand to buy the stock.
When stocks are this expensive, even a simple put option can break the bank. That's why I want to tell you about a strategy that can cut your risk significantly while delivering the same kind of impressive returns...
Cash In on Microsoft's Smart Plan the Smart Way
It's called the Loophole Trade. By buying a put option on a stock while simultaneously selling a put option with the same expiration date but a different strike price, you can cash in on expensive stocks without emptying your wallet.
That's what my readers did with Waters Corp. (NYSE: WAT) just last month.
On Aug. 7, 2019, Waters Corp. was trading around $207. For 100 shares, that would run you $20,700. But my readers used something I call a "Loophole Trade"; they were able to spend just $3.72, or $372 for control over 100 shares.
Then, a little over a month later, on Sept. 10, Waters Corp. had risen to $216. And my readers sold their Loophole Trade for $7.50, banking a 101.61% return.
Your broker probably calls a Loophole Trade a bull put spread, but it's the same thing. Here's how you do it.
Using a day only order, you buy to open one Microsoft put at your desired strike price. Then you sell to open another Microsoft put at the next higher strike price for a net credit to your account.
Then, when the trade goes your way, you sell to close the first Microsoft put and buy to close the Microsoft put with the higher strike and pocket the profits. As you see, those gains can be pretty big.
My readers were able to control huge stock positions for basically pennies on the dollar! That's what options can do for you.
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About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.