Microsoft Call Traders Active as Dow Stock Climbs

MSFT options traders have been active in the past two weeks

by Patrick Martin

Published on Apr 1, 2019 at 11:56 AM
Updated on Jun 24, 2020 at 10:16 AM

Microsoft Corporation (NASDAQ:MSFT) is less than two weeks removed from its March 21 record high of $120.82. Amid MSFT's climb up the charts, call options have been flying off the shelves lately.

In fact, the equity showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest total options volume during the past 10 days, with names highlighted in yellow new to the list. Per the chart below, 579,526 MSFT calls were exchanged over this two-week time frame, as opposed to 408,075 calls.

MAO April 1

Today, Microsoft calls are handily outnumbering puts. Roughly 70,000 calls have crossed the tape, compared to 45,800 puts -- with total options volume almost double the average intraday amount. Most active are the weekly 4/12 119- and 124-strike calls, as well as the weekly 4/26 120- and 126-strike calls, and spread activity is detected at all four.

Microsoft sports relatively inexpensive short-term option premiums right now. The stock's Schaeffer's Volatility Index (SVI) of 17% is higher than just 6% of all other readings from the past year, suggesting MSFT's near-term options are pricing in relatively low volatility expectations at the moment.

Since 2008, there have been four other times when MSFT shares were within 2% of a 52-week high and simultaneously sported an SVI in the bottom 20% of its annual range. After those signals, the stock was higher one month later 75% of the time, averaging a gain of 1.56%, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. While that may not seem like much, a pop from its current perch of $118.64 would put Microsoft stock at $120.49, a chip-shot away from that March 21 record high.


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