Patience pays off for $MSFT bulls

Option traders who piled into Microsoft last summer collected astronomical profits today.

Way back on July 7, Investitute’s proprietary programs flagged the purchase of 11,000 February $80 calls for $1.09 as part of a bullish spread with shares at $69.75. This was clearly a new position, as open interest in the strike was only 481 contracts before the activity appeared. Investitute co-founder Jon Najarian cited that trade on CNBC’s “Halftime Report.”

Those calls sold for $15.85 today, more than 14 times their purchase price. The stock rose 37.3% in the same time period, 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 reached an all-time high of $96.07 this morning before pulling back to close at $94.25, off 0.8% on the session. The software giant’s revenues topped analyst expectations after the market closed yesterday.