Unusual Options Activity: Microsoft (MSFT)

Tech conglomerate Microsoft (MSFT) has been trending higher in recent sessions, and just broke through to a new 52-week high. One trader is betting that the uptrend will continue in the short term.

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  • That’s based on the June 30 $330 calls. With 38 days until expiration, 7,806 contracts traded compared to a prior open interest of 175, for a 45-fold rise in volume on the trade. The buyer of the calls paid $4.10 to make the bullish bet.

    Microsoft recently traded just under $320, so the stock would need to rise about $10, or 3 percent, for the option to move in-the-money.

    The tech giant has grown revenues by 7 percent and earnings by 9 percent amid a slowing economy in the past year. And, Microsoft sports a 33 percent profit margin, boosted by its software sales.

    Action to take: Shares are worth buying for the long term, as the company will likely continue to dominate in any tech space it gets involved in. However, there will always be pullbacks, and with shares at 38 times earnings, now may be time for investors to wait for a drop back under $310 before buying.

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  • For short-term trades, the trend is up. Until that reveres, trades like the June 30 $330 calls can likely deliver mid-double-digit gains.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.