Microsoft Corporation (NASDAQ: MSFT)

Market sentiment: Bullish

Microsoft’s share price is trading higher from past 3 days after its planning to buy back as much as $20 billion. A buyback of $15 billon to $20 billion would lift earnings per share by as much as 10 cents annually – a top rated analyst says.

If this stock won’t go much further down, then it could be a good time to play bullish hedge trade.

As per my technical analysis, MSFT chart pattern looks bullish. The reasons are:

• MSFT has found strong support at $25 to $26 price zone
• It has made higher highs and higher lows and started a new uptrend after breaking the blue trend line.
• It has formed a saucer bottom at the same price zone and is trading well above it with relatively high volume
• Price is above SMA (14, close) which indicates that mid-term trend is positive.
• RSI (14) is 61 which indicate strong strength.

Keeping the above technical and fundamental reasons in mind, this could be a good time to do September bull-put credit spread below $25. This trade will return 10% profit in 7 weeks time as long as MSFT stays above $25 at September expiration.