Microchip Splits at the Close

Today is October 12th, at the close today Microchip (MCHP) will do a 2:1 split. As you know I like to play splitting stocks, but I don’t like the way this stock has been moving. Then again, I don’t like the way anything is moving. Having said that, I’m sticking to my split strategy. Today with the stock at $142.90 I bought 5 MCHP 6/17/22 $145 Calls. After the stock splits I like to get out with a gain as soon as I can. So I normally would buy a shorter term option, but since I don’t like the way the stock is moving I went out to June with my Strike Price. However, I plan on being out much sooner. Going out a bit gives me  protection against Time Decay.

Buy to Open 5 MCHP 6/17/22 $145.00 C @ $14.40

I bought 5 contracts of the 145 Calls. After the close I’ll own 10 contracts of the $72.50 Calls. I don’t like the way the stock is moving but It’s still an A rated stock with an “Outperform” rating. I think I’ll make money on this trade. I give the trade a Risk Factor 2.

If you have any questions on my split strategy send me an email.

 

Successful trading,

Steve

The Options Coach