Options Traders, Analysts Respond to Microsoft's Earnings

Bulls are blasting MSFT in the options pits today

Digital Content Manager
Apr 27, 2022 at 10:26 AM
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Microsoft Corporation (NASDAQ:MSFT) is surging today, last seen up 5.5% to trade at $285.38, following the tech name's top- and bottom-line wins for the third-quarter. More specifically, the company reported profits of $2.22 per share on $49.36 billion in revenue, the latter of which represents an 18% year-over-year rise. Also boosting the stock was an upbeat fourth-quarter revenue outlook for Microsoft's productivity, cloud, and personal computing segments.

The brokerage bunch is already chiming in on the results. So far, four firms have cut their price targets on MSFT, with Wedbush lowering its objective to $340 from $375. At least two analysts have gone the opposite route, however, with Citigroup hiking its price target to $364 from $355.

Regardless, analysts remain overwhelmingly optimistic on MSFT, with all 22 in question carrying a "buy" or better rating. Meanwhile, the 12-month consensus target price of $365.67 is a 28% premium to current levels. 

Options traders are rushing the equity today. So far, 107,000 calls and 78,000 puts have crossed the tape, which is four times the volume that is typically seen at this point. Most popular is the weekly 4/29 300-srike call, followed by the 290-strike call in the same series.

Though long calls have been outpacing long puts on an overall basis, it is still worth noting the latter have been getting picked up at a much quicker-than-usual pace of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MSFT's 50-day put/call volume ratio of 0.70 sits higher than 92% of readings from the last 12 months. An unwinding of this pessimism may propel shares even higher.

Microsoft stock is today bouncing off a familiar floor at the $270 level, which contained pullbacks in both February and March. Shares are also eyeing their first close above the 10-day moving average in just over three weeks, though they still carry a 14.9% year-to-date deficit.


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