Options Traders Target Microsoft Stock Amid Big Tech Pullback

Puts have been more popular than usual in the options pits

Deputy Editor
May 23, 2022 at 11:54 AM
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Technology stocks have come crashing back down to earth amid Wall Street's 2022 selloff, with Microsoft Corporation (NASDAQ:MSFT) and Big Tech shedding a combined $2.5 trillion in market cap year-to-date. Microsoft stock is brushing off a price-target cut to $325 from Jeffries earlier today, and was last seen 1.4% higher at $256.14. Despite today's gains, MSFT still sits 23.7% lower in 2022, and has logged six weekly losses in the last seven.

MSFT Chart May 23_2022

No stranger to elevated options volume, Microsoft stock is on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume within the last two weeks, with new names to the list highlighted in yellow. According to this data, 1,968,531 calls and 1,430,6010 puts were exchanged over this two week time period. The most popular contract was the May 270 call.  

MAO Chart May 23

Despite calls outnumbering puts on an absolute basis, the stock's 10-day put/call volume ratio of 0.83 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the 91st percentile of its annual range, implying a healthier-than usual appetite for long puts of late.

Now could be a good time to weigh in on MSFT's dip with options, too. The stock tends to outperform its volatility expectations, per its Schaeffer's Volatility Scorecard (SVS) ranking of 79 out of 100.


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