Option Trading Tip: Microsoft is a huge company and you probably already have their stock either in your personal portfolio or in any mutual funds you may have. Lately MSFT has not been doing much. But I think that is going to change.
For a stock to move it needs a catalyst, some reason that will make it jump or fall. This could be earnings, bad news, new sources of revenue, etc.
For MSFT the catalyst comes in the form of a software upgrade.
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I have a friend who one a successful custom software development company. As a software developer he was given an advance copy of Windows 7, Office 2010, and the new version of some developer software.
I have never seen him get so excited about software that he has not written himself. He told me that Windows 7 was awesome, and that every developer that uses Microsoft will upgrade to the new developer software and those that do not use Microsoft will switch.
He even gave me a short demo in Windows 7 and it looked nice. Not being a techie I did not get as excited but it sure looked better than the XP I use now.
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Because of these new releases, I feel that MSFT is a buy from now until at least 2 earnings announcements after the release of these products. As the launch comes closer, the stock will rise until the release, and then dip until earnings. If sales are good, the stock will rise on earnings for at least 2 quarters.
But there is another play here. There are many individuals like myself and IT buyers at large companies that are waiting to upgrade their computers after Windows 7 comes out. There is no sense in buying a new computer now and having to upgrade the software in a few months.
So even if Windows 7 is not a blockbuster, I feel that new computer purchases will be on hold until it releases and that means you can get into stocks like HP, DELL, and INTEL now and ride them higher as sales go up because of the Windows 7 release.
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