$MSFT bulls score profits

Bullish option traders have been rewarded again on upside positions in Microsoft (MSFT).

On Dec. 30, Market Rebellion’s Unusual Activity scanners identified the purchase of 4,500 Weekly $165 calls expiring on Feb. 7 for $1.52 as part of a bullish roll with shares at $157.26. This was clearly a new position, as volume was above the strike’s previous open interest of 128 contracts.

Market Rebellion co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $5.70 today, more than 3.5 times their purchase price. The stock rose 6.9% in the same time frame, showing how options can far outperform their underlying shares on  relative basis.

It is the third winning trade in the name to be posted on Market Rebellion this month.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

MSFT is ended 0.36% lower today at $166.50, after making a new all-time-high of $168.19 earlier in the session. The software giant’s price target was raised by RBC Captial this morning, to $180 from $163.