Microsoft Options (MSFT): Unusual Trading Activity

| June 14, 2012 | 0 Comments

MSFT OptionsOptions in mega software company Microsoft (MSFT) are lighting up the options radar in a big way today.

It seems “Mr. Softy” is drawing a lot of positive attention from investors.  In fact, options activity in MSFT over the last week has been about 5 times more than average.

What’s going on?

Despite reporting great earnings in April, the software giant’s stock has suffered a huge pullback over the last few weeks.

And one option trader clearly wants to take advantage of the situation.

Ten seconds after the opening bell this morning, our tracking system picked up a block trade of 10,000 MSFT July $29 call options.  They traded at an average price of $1.01 a piece.

This is what I call a sound, calculated bet.  You see, with only a month until expiration and the option at the money, the probability of this trade returning a profit is close to 60%. 

But why so much call activity?

I’ll get to that in a moment… but first, let me say a few words about the company.

As I’m sure you know, Microsoft develops the Windows PC operating system, the Office suite of productivity software, and enterprise server products.

The Windows PC and Office franchises collectively account for nearly 60% of the firm’s revenue, and the server and tools business contributes 24%.

The rest comes from the firm’s other businesses, including the Xbox 360 video game console, Bing Internet search, business software, and software for mobile devices.

Now, getting back to today’s unusual call buying…

As I said earlier, this trader is trying to take advantage of the pullback in Microsoft shares amidst the recent broad market correction.  He probably believes a couple of upcoming events will act as positive catalysts for the shares. 

First off, Microsoft’s Azure platform is poised to develop into a larger business than their historical cash cows… such as Vista and Office.  Azure is the company’s revolutionary cloud computing platform.

Also, Microsoft’s partnership with Nokia (NOK) should drive large market share gains for the Windows Phone platform.  In fact, the venture should create the next $1 billion-plus annual revenue stream for the company.

Bottom line… MSFT has a lot going for them.  And I believe this large call position is a very smart play.

For more detailed information on unusual options activity and how you can profit from it, be sure to sign-up for our daily newsletter, Options Trading Research.  It’s always 100% free and packed full of option trading ideas you can use immediately in your own portfolio.  Click here to subscribe for free.

Safe Trading,

Marcus Haber


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Category: Unusual Options Trading Activity

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.