Microsoft Corp. - MSFT - close: 26.20 change: -0.07

Stop Loss: 24.40
Target(s): 27.45, 29.00
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Company Description:
Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential. (source: company press release or website)

Why We Like It:
MSFT made headlines today when the company sold one million of its Kinect devices for its Xbox game system in the first ten days of retail sales. Now I'm not suggesting we buy MSFT due to its Kinect or Xbox sales but bigger picture, if the U.S. and the world does not slip back into a recession then sales from both the retail side and business side should be picking up for a big tech company like MSFT. We want to buy the dip. I am suggesting a trigger to buy MSFT or call options at $25.55. If triggered our first target is $24.75. Our second target is $29.00. We'll use a stop loss at $24.40 but more conservative traders might be able to get away with a stop closer to $24.90 since the $25.00 level should be decent support. My time frame is a couple of months.

Suggested Position: buy MSFT stock @ 25.55

- or -

Buy the 2011 January $25.00 calls (symbol: MSFT1122A25) current ask $1.70

Annotated chart:

Entry on November xx at $xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 68.4 million
Listed on November 15th, 2010