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Most Active Options Update: Microsoft Corporation (MSFT)

Microsoft Corporation's weekly 6/13 38-strike put is active today

by 5/23/2014 2:19 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 among options traders this afternoon is Microsoft Corporation (NASDAQ:MSFT).


Microsoft Corporation has seen an uptick in put volume of late, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Since May 1, the equity's 10-day put/call volume ratio on these exchanges has grown to 0.76 from 0.54, and now ranks in the 76th percentile of its annual range. Simply stated, puts have been bought to open over calls at a faster-than-usual clip of late.

Amid today's low-volume session, it's a put that's emerged as the most sought-after MSFT option. Specifically, the equity's weekly 6/13 38-strike put has seen 6,000 contracts cross the tape -- mostly in three large multi-exchange sweeps totaling 5,403. All of the contracts traded at this out-of-the-money strike have done so at the ask price, implied volatility is up 1.4 percentage points, and volume easily outstrips open interest, collectively pointing to the initiation of new positions.

In order for traders to reap a reward on the play, MSFT needs to be perched south of breakeven at $37.90 (strike less volume-weighted average price of $0.10) at the close on Friday, June 13 -- when the weekly contracts expire -- below which profit will accrue all the way down to zero. Should the stock expire above the strike price, the most the speculators stand to lose is the initial premium paid.

On the charts, MSFT hasn't breached the $38 mark on an intraday basis since March 17, with the stock last seen trading at $40.07. Not surprisingly, the options market isn't too confident of an in-the-money finish, as delta on the put is docked at a slim negative 0.11.

Off the charts, Microsoft Corporation (NASDAQ:MSFT) has been making a number of headlines of late. For starters, documents released yesterday revealed MSFT last year challenged the FBI's secret request for data. Meanwhile, the software giant announced a new version of Windows 8.1 with Bing for lower-cost devices. Elsewhere on the Street, strong sales of Microsoft's Xbox helped GameStop Corp. (NSYE:GME) post solid results in the first quarter. Looking ahead, MSFT is slated to appear at the Cowen Technology, Media & Telecom Conference next Wednesday.

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