Unusual Options Activity in Microsoft $MSFT (1)

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• OPTIONS TRADING RESEARCH

Unusual Options Activity in Microsoft MSFT
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• Hi, My name is Steve and Im with Options Trading
  Research, today were reviewing our recently
  published article

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• Unusual Options Activity in Microsoft MSFT

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• As many of you know, unusual options activity can
  be a valuable indicator as to what traders are
  thinking, and more importantly, where these
  stocks are heading in the short-term.

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• This is something professional options traders
  pay a lot of attention to, and for good reason
  Unusual options activity can tip off big moves
  in a stock, either up or down.

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• So lets take a look at some interesting
  activity that caught our eye this week Microsoft
  MSFT is, as I'm sure you know, the largest
  software company in the world.

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• The company's Windows operating system dominates
  the PC market. For a good description of the
  company, follow the link.

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• MSFT is trading at 43.44, down 5 for the year.
  Thats 11 below the 52-week high, and 10 from
  the 52-week low.

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• So what does unusual options activity in MSFT
  tell us?

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• MSFT has pretty much moved in step with the
  market. The stock, with a beta of 0.92, is at
  the point where it pretty much tracks the overall
  market very closely.

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• While MSFT has dropped with the market, it
  actually has outperformed the SP 500 by over 2
  this year. That's a sign of relative strength.
• Heres the deal

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• This week, a trader sold a large block of MSFT
  calls expiring in early November. Keep in mind,
  a call option makes money when the underlying
  stock or stock goes up.

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• As such, selling calls would make money if the
  stock declines or stays below the call strike.

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• Specifically, a trader sold 16,700 48 calls
  expiring on November 6th. The total cash
  collected for this trade is roughly 330,000 or
  0.20 per option, which is the max gain for the
  trade.

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• The trade breaks even at 47.80. Heres the chart
  of MSFT

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• As you can see, MSFT dropped below its 50-day
  moving average during the stock correction in
  late August. It's regained quite a bit of
  ground, but is still trading beneath the 50-day
  line.

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• This trade is suggesting MSFT has some upside,
  but is likely to be neutral for the next month.
  Basically, the trade is one of two things... a
  covered call trade, or a naked call sale.

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• The covered call trade would be clearly bullish
  since the stock could still appreciate over 4
  and the trade would be maximized. On the other
  hand, even a naked call sale is somewhat bullish
  considering it's so far out-of-the-money.

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• At the very least, it would be show a neutral
  stance on the stock - which is saying something
  considering where the market has been moving
  lately.

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• More Options Trading Ideas

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• Keep in mind, theres a lot more unusual options
  activity going on than what we discuss here. We
  just try to bring you what we feel are the most
  significant ones and the ones you might actually
  be able to make some money on!

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