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Most Active Options Update: Microsoft Corporation (MSFT)

Microsoft Corporation option bull pays $10.4 million to bet on a big move higher

by 7/11/2014 2:14 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).


A sharp bounce off its 40-day moving average on Thursday has helped Microsoft Corporation power higher today -- and as my colleague Elizabeth Harrow noted yesterday, additional gains may be on the horizon. This afternoon, though, the stock was enjoying a 0.6% lead at last check to trade at $41.95. Against this backdrop, roughly 124,000 calls have changed hands on MSFT -- nearly doubling the equity's average daily call volume of 64,000.

The most active MSFT option by far is the January 2016 45-strike call, where 40,034 contracts are on the tape. Almost all of this action occurred roughly an hour ago, when a massive sweep of 40,000 contracts was bought to open at an ask price of $2.60, resulting in an initial cash outlay of $10.4 million (number of contracts * premium paid * 100 shares per contract).

This premium paid also represents the maximum potential loss on the play, should Microsoft Corporation (NASDAQ:MSFT) settle south of the 45 strike at January 2016 options expiration. Meanwhile, gains are theoretically unlimited with each additional step north of breakeven at $47.60 (strike plus premium paid) the stock takes. Of note, the activity at this strike could also be part of a larger roll-up strategy, as a sweep of 23,100 January 2016 40-strike calls may have been sold to close at around the same time the aforementioned calls traded.


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