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Microsoft Corporation (MSFT) Traders Make a Bold Prediction

Microsoft Corporation's July 45 call is being bought to open today

by 3/28/2014 2:48 PM
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Option Brief: Microsoft Corporation (NASDAQ:MSFT) is helping keep the Dow Jones Industrial Average in the green today, after its Office for Apple Inc.'s (NASDAQ:AAPL) iPad reveal prompted a pair of price-target hikes this morning. At last check, the stock was up 2.3% to trade at $40.28. Not surprisingly, calls are being traded at a 63% mark-up to average intraday levels, and have almost doubled the number of puts that have changed hands.

The most popular position by a mile is MSFT's July 45 call, where 14,097 contracts have been exchanged. (As a point of comparison, the next most active option has seen about 7,000 contracts cross the tape.) The majority of the action at the July 45 call has occurred on the ask side, implied volatility has edged higher, and fewer than 3,600 contracts currently reside here. Summing it all up, it appears that a fresh batch of bullish bets is being initiated.

The bet is a bold one for option traders, considering MSFT hasn't explored territory north of $45 in nearly 14 years. However, the equity has been tagging a string of higher highs of late, thanks to support from its rising 20-week moving average, and this past Tuesday notched a 13-year high of $40.99. Should Microsoft Corporation (NASDAQ:MSFT) fail to topple the strike price ahead of July options expiration, though, today's call buyers can rest easy knowing the most they have risked is the initial premium paid.


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