Two LEAPS I’m bullish on. IBM is the cheap-multiple AI hybrid. MSFT is the Ackman trade.
IBM · Jan 2027 $290/$340 call spread · target $360-380 · 12-14 month hold · 4.5/5 conviction. MSFT · Jan 2027 $450/$520 call spread · target $540-580 · same horizon · 4.0/5 with the Ackman $2.1B whale anchor. Both up hard today (IBM +12.7%, MSFT +5.4%) so the trade is to set GTC limits at the retrace zones and wait. Below: technical read, entry levels, and why I’m skipping ORCL, PLTR, and PENG as LEAPS.
Two LEAPS · both bullish · both up hard today. The trade is timing, not direction.
IBM +12.7% on 28M shares (~5x avg vol). MSFT +5.4% on heavy volume. Both wide-range breakout bars on a sector-wide AI rally. Bulkowski catalogs this as a high-probability mean-reversion setup over the next 5 days · pullbacks of 5-10% statistically common post-spike. IV expanded 15-30% so LEAPS premiums are 5-15% pricier than yesterday. Net: don't enter today · set GTC limits at the retrace zones.
| Ticker | Price | Today | P/E | FCF | Mkt Cap | From 52W High |
|---|---|---|---|---|---|---|
| IBM | $297.80 | +12.7% | 26.0x | $13.1B | $280B | -8.3% |
| MSFT | $450.24 | +5.4% | 26.7x | $72.9B | $3.34T | -18.9% |
Why Call Spreads, Not Naked Calls
IV expansion today means naked long calls carry elevated vega. Selling the higher strike against the long lower strike (call spread) reduces net vega exposure and partially offsets the IV premium you're paying. Cost goes down · max profit caps but R/R stays ~2x on both names.
The cleanest LEAPS setup. 26x P/E · 4.7% FCF yield · $13B FCF · bipartisan Congress buying.
IBM is the cheapest credible AI exposure in megacap. Watsonx + Red Hat + consulting moat · AI agent and hybrid cloud bookings accelerating. Up 40% off lows but still cheap vs the AI cohort. Today's +12.7% on 28M shares (~5x average volume) is the strongest institutional signal in the basket.
Technical Read
| Today's Bar | +12.7% on 28M shares · ~5x avg vol · wide-range breakout |
| Position In Range | -8.3% from 52W high · +40% from low · uptrend intact |
| Pattern | Bulkowski Wide Range Bar on Volume · bullish · mean-reversion likely 3-5 days |
| Support | $280-285 (prior breakout zone) · $270 (50DMA) · $255 (deeper) |
| Resistance | $325 (52W high) · $345-360 (Fib extension target) |
| Entry Window | Retrace to $278-285 · GTC limit orders this zone |
The Trade
| Structure | Jan 2027 $290/$340 call spread on pullback to $278-285 |
| Cost | ~$22-26 per spread |
| Max Profit | $50 if IBM > $340 at Jan 2027 expiry |
| Risk/Reward | ~2.0x |
| Target | $360-380 in 12-14 months · +20-28% on stock · +80-150% on spread |
Risk
After +12.7% spike you're chasing at current levels. IV expanded. Setup needs the post-spike consolidation to materialize · if IBM rips through $325 without a pullback, entry zone resets higher and R/R degrades.
The boring pick. $72.9B FCF · Pershing Square $2.1B new Q1 · 4 directors bought March 12.
Default AI infra exposure · Azure + OpenAI + Copilot + M365. The "almost impossible to lose money on over 18 months" pick. Today's +5.4% is less stretched than IBM's +12.7%, which makes entry timing more favorable.
Bullish Stack
- Ackman $2.1B new Q1 · multi-year conviction
- 4 directors bought March 12 · Walmsley, Rainey, Pritzker, Peterson
- Citadel increased · quant accumulation
- $72.9B FCF · strongest cash machine in megacap
- Bipartisan Congress buying · McGuire-R, Warner-D, Boozman-R, Salazar-R
Technical Read
| Today's Bar | +5.4% to $450.24 · less stretched · room to run before mean reversion |
| Position In Range | -18.9% from $555 52W high |
| $450 Level | Prior support reclaimed · launchpad if held |
| 200DMA | ~$440-445 · key technical line · Ackman likely entered near here |
| Support | $425-435 (entry zone) · $400 (deeper) |
| Resistance | $480 · $500 (psychological breakout) · $555 (52W high) |
| Setup | Cup-and-handle pending if $500 breaks · target $580+ |
The Trade
| Structure | Jan 2027 $450/$520 call spread on pullback to $425-435 |
| Cost | ~$30-35 per spread |
| Max Profit | $70 |
| Risk/Reward | ~2.0-2.3x |
| Target | $540-580 in 12-14 months · +20-29% upside |
Why Not 5.0
-18.9% from 52W high · 26.7x P/E reasonable not cheap · Copilot monetization questions · Azure deceleration would compress multiple.
Trade ideas like this, before they hit the timeline.
Join Discord →Why ORCL, PLTR, PENG aren't in my LEAPS book. One line each.
| Ticker | Price | Why Not LEAPS | If You Want Exposure |
|---|---|---|---|
| ORCL | $225.81 | -$24.7B trailing FCF · 14 months of premium decay against existential cash burn risk | Monthly $200/$185 bull put spread · sell premium into elevated IV |
| PLTR | $156.54 | 164x P/E · multiple compression to 80x (still expensive) = 50% drop · LEAPS unfavorable | Monthly $135 CSP · collect premium · assignment at discount |
| PENG | $55.83 | Cluster insider selling (4 officers Apr 16-20) near 52W high · options illiquid at $2.9B cap | Buy stock directly or Jan 2027 $60c at 1% portfolio max |
Set these and wait. Don't pay today's IV.
| Ticker | Today | Retrace To | Then Trigger | Spread Cost |
|---|---|---|---|---|
| IBM | $297.80 | $278-285 | Jan 2027 $290/$340 spread | ~$22-26 |
| MSFT | $450.24 | $425-435 | Jan 2027 $450/$520 spread | ~$30-35 |
Post-spike pullbacks of 5-10% statistically common within 5 trading days · these GTC zones represent that retrace. If neither hits in 10 trading days, reassess against new support zones.
Two LEAPS · both bullish · both wait for retrace. That's the whole trade.
IBM is the cheap-multiple bet · 26x P/E + $13B FCF + bipartisan Congress accumulation + 5x-volume breakout day. MSFT is the Ackman bet · $2.1B new Q1 position is the single strongest smart-money signal in software right now. Both call spreads (not naked calls) to reduce vega · both targeting +20-29% upside on the underlying over 12-14 months · both waiting on a retrace zone before entry.