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$MSFT bulls score big on earnings
Option traders more than doubled their money in Microsoft options that expired this afternoon. On May 14, Investitute’s market scanners identified the purchase of 8,492 July $97.50 calls for $4.15 as part of a bullish roll with shares at $98.37. This was clearly a new position, as volume was above the strike’s open interest of […]
Option traders more than doubled their money in Microsoft options that expired this afternoon.
On May 14, Investitute’s market scanners identified the purchase of 8,492 July $97.50 calls for $4.15 as part of a bullish roll with shares at $98.37. This was clearly a new position, as volume was above the strike’s open interest of 8,271 contracts. Investitute co-founder Jon Najarian, who cited the unusual activity at that time, updated the trade today on CNBC’s “Halftime Report.”
The calls, which Investitute already updated once on Tuesday, jumped again to $10.63 today–more than 2.5 times their purchase price. The stock rose 9.07% in the same time, underscoring how options can far outperform their underlying shares.
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 peaked at an all-time high of $108.20 this morning before settling back to close at $106.27, up 1.79% on the session. Strong earnings and guidance issued last night triggered a raft of analyst upgrades today.