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Most Active Options Update: Microsoft Corporation (MSFT)

Microsoft Corporation call buyers bet on a quick rebound

by 1/8/2014 2:28 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Microsoft Corporation (NASDAQ:MSFT).


Microsoft Corporation has shed 1.6% today to churn near $35.83, after Ford Motor Company (NYSE:F) CEO Alan Mulally put the kibosh on rumors that he is in the running to become the next head of the software concern. Despite the stock's drop, call volume is running at nearly two times the average intraday pace. The most active strike is the February 38 call, where 20,678 contracts -- including one massive block of 15,771 -- have changed hands, 94% on the ask side. Implied volatility is on the rise, and volume exceeds current levels of open interest, pointing to buy-to-open activity.

By initiating these long calls, speculators believe MSFT will reclaim its perch north of $38 -- the stock was last seen trading above this level on Dec. 11 -- by the close on Friday, Feb. 21 (when these contracts are due to expire). The options market, meanwhile, is giving the position a 1-in-4 chance of an in-the-money finish, based on the call's delta of 0.25. It should be noted that Microsoft Corporation (NASDAQ:MSFT) is slated to unveil its fiscal second-quarter earnings report after the close on Thursday, Jan. 23. A well-received quarterly report in late October helped push MSFT shares nearly 6% higher in the subsequent session.


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