$MSFT bulls score fast profits

Bullish option traders have been rewarded with fast profits on upside positions in Microsoft (MSFT) today.

On Friday, Feb. 28, Market Rebellion’s Unusual Activity scanners identified the purchase of 12,500 Weekly $165 calls expiring on Mar. 6 for $2.10 to $2.70 with shares at $153.66. This was clearly a new position, as volume was well above the strike’s previous open interest of 2,027 contracts.

Those calls traded for as much as $6.25 today, more than double their purchase prices. The stock rose 9.83% in the same time frame, showing how options can far outperform their underlying shares on a relative basis.

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 was last 3.16% higher today at $167.13. The software giant has rebounded sharply today along with the rest of the market after declining last week.