$MSFT option bulls score profits at highs

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

On Oct. 18, Market Rebellion’s Unusual Activity Service found that 20,000 Weekly $305 calls, expiring this Friday, were bought for $1.41 to $2.65 above the existing open interest of 7,698 with shares at $302.72.

Those calls traded for as much as $6.10 during this session, more than double their purchase prices. The stock rose 2.74% 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 at the close was at $310.76, up 1.09% on the session just below its new all-time-high of $311.02 made earlier.