$MSFT bulls triple their money

Bullish option traders are being rewarded today with big profits on upside positions in Microsoft (MSFT) as it sets a new record high.

On Jun. 9, Market Rebellion’s Unusual Activity scanners identified the purchase of 8,500 Weekly $200 calls expiring next Friday, Jul. 10, for $1.67 to $2.05 with shares at $188.61. This was clearly a new position, as volume was clearly above the strike’s previous open interest of 468 contracts.

Those calls have traded for as much as $7.25 thus far this session, at least 3.5 times their purchase prices. The stock rose 9.15% in the same time frame, showing how options can far outperform their underlying shares on a relative basis.

This is the second winning trade in the name to be posted by Market Rebellion in just over the last 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 was last trading at $205.85, up 1.15% on the session just below its new all-time-high of $205.94 made earlier.