Microsoft Sees $29 Million Bullish Options Block Trade: Options Chatter
$Microsoft (MSFT.US)$ attracted a $29 million bullish block trade in options Friday, ahead of its Build developers' event that’s expected to focus on rising usage of generative artificial intelligence.
At 1:06:08 p.m. in New York, a block trade was posted with an active buyer paying a $29.27 million premium for call options that give the holder the right to buy 287,000 Microsoft shares at $350 each by June 20, exchange data showed.
The price of that contract more than doubled over the past four weeks as Microsoft shares advanced 15%, climbing way above that strike price. That strengthened the case for shareholders who sold call options to buy back the contracts, if they are optimistic that the share price rally could continue.
That block trade was posted at the exact time. An active seller collected a $68,880 premium for put options that give the holder the right to sell 287,000 Microsoft shares at that same strike price of $350 with the same expiration date of June 20. Those out of the money put options could expire worthless for their holder and profitable for the seller, should the stock price continue to trade above that strike price.
Bloomberg Intelligence analysts Anurag Rana and Andrew Girard expect the Build developer event scheduled for May 19 to 22 to demonstrate “more use cases and lower-cost large language models.”“Announcements on these efforts could support our thesis that Microsoft's total AI revenue will top $21 billion this year and approach $40 billion in 2026,” the analysts wrote in a note Thursday.
On April 30, the company reported a 15% jump in revenue to $70.1 billion in its fiscal third quarter that ended March 31, amid sustained spending on artificial intelligence infrastructure.
AI services contributed 16 percentage points of the 35% growth in Azure revenue during that period, helping Microsoft surpass analysts’ expectations for its top and bottom line surpass analysts’ expectations.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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HowYouDo : That is a lot of money but it's definitely money well spent.
74614775 : I know this is dumb of me but does that mean theyre bullish on the stock just staying above that 350 strike price or is it it also bullish on surpassing the current price of 452?
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Cypher 74614775 : Correct. But more precisely they’re betting on the stock to keep rising because they might still lose money if the stock declines but stay above $350, but they won’t lose it all as long as it stays above the strike.