Most Active Weekly Options: Microsoft Corp. (MSFT)

Microsoft Corporation tagged a fresh 14-year peak earlier

Nov 7, 2014 at 12:30 PM
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The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those 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 today is software issue Microsoft Corporation (NASDAQ:MSFT), as traders bet on a quick retreat from decade-plus highs.

Most Active Weekly Options Table

Microsoft Corporation tagged a fresh 14-year peak of $48.92 earlier, but was last seen 0.6% lower at $48.43. This change of trajectory has option bears rolling the dice on a steeper retreat over the next week, as they scoop up the equity's weekly 11/14 48.50-strike puts.

Specifically, this at-the-money put has seen the most action in MSFT's options pits today, with 5,957 contracts on the tape at last check. The majority of these have changed hands at the ask price, implied volatility has edged higher, and fewer than 450 contracts currently reside here, making it safe to assume new positions are being purchased.

Based on the volume-weighted average price (VWAP) of $0.54, breakeven at next Friday's close -- when the weekly series expires -- is $47.96 (strike less VWAP). Gains will accumulate south of here, while losses are limited to the initial premium paid, should MSFT settle north of the strike at next Friday's close.

From a wider sentiment perspective, option traders have been initiating long puts over calls at a faster-than-usual clip in recent months, despite MSFT boasting an impressive 29.5% year-to-date gain. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.88 ranks just 2 percentage points from a 52-week peak. Should the stock continue to notch a series of higher highs, an unwinding of the hedges related to these bearish bets -- or a re-evaluation of ratings from the skeptical brokerage bunch -- could help fuel Microsoft Corporation's (NASDAQ:MSFT) fire.


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