Microchip Split Announcement

Today around noon Microchip (MCHP) came out with a 2:1 split announcement. You know how I like my splitting stocks!

The day of the split announcement is one of the first times to get involved in my split strategy. The only time before the announcement is on a rumor. With so few stock splits there really aren’t any rumors out there.

Today I entered my first position with MCHP to be involved in the stock movement a splitting stock normally makes. I started easy. With the stock at $151.50 I bought 2 contracts of the MCHP 1/21/22 $150 Calls for a premium of $13. This cost me $2600.

Buy to Open 2 MCHP 1/21/21 $150.00 C @ $13.00 

With NVDA I only went out a few months with my first position. With MCHP I went out to 1/21/22. My first position I normally don’t stay in too long. The stock will normally move on the stock split announcement and I’ll take profit in a week or 2. MCHP might be a little different. The stock has a market cap of $40 billion which makes it a large cap, but this stock does not have the trading volume of the last splitting stocks, Tesla, Apple and Nvidia. Today Microchip only traded 1.5 million shares where Tesla traded 10 million, Apple 44 million and Nvidia 29 million so far today.

With this lower trading volume in mind I’ll play this split as I see fit. This is why I went with the Expiration Date of January 2022. It’s a large cap stock that is an S&P 500 component so I must be involved. Let’s watch this one closely to see how the split announcement moves the stock.

Microchip (MCHP) will be making a 2:1 stock split on October 12, 2021. The extra shares will be in accounts involved on October 13th.

 

Successful trading,

Steve

The Options Coach