Most Active Weekly Options: Microsoft Corporation (MSFT)

Microsoft Corporation option traders continue to switch sides

Nov 19, 2014 at 1:58 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 Microsoft Corporation (NASDAQ:MSFT), where sentiment continues to shift to the bullish side.

Most Active Weekly Options Table

Microsoft Corporation option traders have been initiating long puts over calls at an accelerated clip in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 50-day put/call volume ratio of 0.79 across this trio of exchanges sits higher than 89% of similar readings taken in the past year.

Recently, though, option traders have begun to switch sides -- a trend that's evident today, with calls crossing the tape at 1.3 times the average intraday pace. Receiving notable attention is MSFT's weekly 12/5 48-strike call, as it appears a number of speculators are betting on the stock to resume its long-term uptrend over the next several weeks.

Specifically, 2,135 contracts have changed hands here -- 96% at the ask price, signaling buyer-driven volume. Implied volatility has edged higher, and fewer than 550 contracts are in residence, making it safe to assume a fresh batch of bullish bets is being initiated. With the stock currently perched just north of the strike -- at $48.16 -- delta on the call is docked at 0.54, suggesting a greater than 1-in-2 chance the option will be in the money at the close on Friday, Dec. 5 -- when the weekly series expires.

As touched upon, MSFT has been a long-term outperformer, with the shares boasting an impressive 29% year-to-date gain. Meanwhile, although the equity is 1.2% lower today amid a broad-market downturn, it's finding a foothold near $48, which is site to a heavy accumulation of put open interest in the soon-to-expire November series of options. This area could continue to serve as support through Friday's close, as the hedges related to these bets unwind ahead of expiration.

On the fundamental front, Microsoft Corporation (NASDAQ:MSFT) scored a legal victory today when a judge denied Samsung's request to delay a patent royalty lawsuit. Drilling down, MSFT alleges Samsung owes it roughly $7 million in interest on a late patent royalty payment of $1 billion, while Samsung claims the deal was nullified with MSFT's purchase of Nokia Corporation's (ADR) (NYSE:NOK) handset business.


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