Microsoft is behaving as I have expected

I'm writing from the airport while waiting for my flight to Switzerland. I will be heading there for a whole week for a business "bootcamp". It will be really a tough week to prepare submission documents with a very intensive working schedule (minimally 12 hours everyday)! I hope I may still have some time to screen the market news and information, which is my antidepressant!

Two months ago, I told you that I was shorting Microsoft as a short-term speculation. Based on technical analysis, I was even pinpointing to where MSFT would likely bottom for this correction.  It seems MSFT is indeed following my "instruction" to act in the past weeks and it did stop declining around $35. As I said, MSFT is a stock I will likely hold forever and I may even add more when the time is right. I think now is one of such times one may consider to buy MSFT.

 

Buying MSFT now for long-term holding is certainly a good idea with dividend reinvestment but a better way to do is to juice up your short-term income, which I call as dividend acceleration. MSFT is going to pay its quarterly dividend in Feb and the last date you can get it is to have the shares before Feb 14. You may buy MSFT stocks and sell its Feb call options against your shares. You may instantly get 2-3% income by doing so for just about 4 weeks. You will then either get the dividend plus the instant extra money from selling the calls or you simply have to sell your shares at a higher price if your shares get called away. Either way, you will be the winner. I have a quite detailed write-up on this topic.