$MSFT bulls double money

Microsoft (MSFT) hit an all-time high today, yielding large gains on upside option positions.

On May 28, Investitute’s market scanners identified the purchase of 2,045 August $135 calls for $2.57. The trade was part of a bullish spread with shares at $127.47.

Those calls traded up to $6.35 today, about 2.5 times their purchase price. The stock rose 9.17% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

MSFT reached a lifetime high of $139.22 this morning and is trading at $138.21 in late-day trading, still up 0.26% on the session. Cowen initiated coverage of the software giant this morning with an “outperform” rating and a $150 price target.