Huge Microsoft Call Bets Point to 40%-60% Upside After the Pullback: Smart Money Option
Large long-dated options trades have recently appeared in $Microsoft (MSFT.US)$ ’s options market, signaling that institutional investors may be positioning for the company’s long-term upside potential in the AI cycle. After the stock pulled back from its 2025 record high, some investors appear to be rebuilding bullish exposure through long-dated, deep out-of-the-money call options, betting that Microsoft’s growth in AI and cloud computing will continue to push the stock higher.
Smart Money Bets on a Long-Term Rally Through Deep Out-of-the-Money Calls
The most notable trade involved the January 2027 $625 call option, where roughly 100,000 contracts traded at $5.05, representing about $50.5 million in premium. The transaction occurred near the ask price, while prior open interest was only about 330 contracts, suggesting the position was likely newly opened. With Microsoft trading around $405 at the time, the strike sits more than 50% above the current price. The option carries a delta of about 0.10, making it a typical long-dated deep out-of-the-money call often used by institutional investors to express a leveraged long-term bullish view.
Another large trade appeared in the January 2027 $575 call option, where about 50,000 contracts traded at $8.80, representing roughly $44 million in premium. The contract has a delta of about 0.16, indicating greater price sensitivity. It also traded near the ask price, and the volume far exceeded existing open interest, signaling that investors were establishing new long-term bullish positions.
At the same time, the market saw activity in the December 2026 $675 call option, with about 50,000 contracts traded and roughly $12.25 million in premium. This trade occurred closer to the bid price, suggesting that some investors may have been selling the call as part of a structured position. It is important to note that these trades may not originate from the same institution, but taken together they suggest that the options market is seeing sizable positioning for a potential rally in Microsoft over the coming years.The volume-to-open-interest ratios were unusually high for all three contracts—peaking above 300—suggesting the trades likely represented newly opened positions.
Based on the distribution of strike prices, if Microsoft shares were to approach the $575 to $675 range in the next few years, it would imply more than 40% to 60% upside from the current price near $410—an ambitious expectation for a technology company with a market capitalization exceeding $3 trillion.
Cloud and AI Growth Continue to Power Microsoft’s Long-Term Story
Microsoft’s fiscal second-quarter 2026 earnings showed that growth continues to be driven by cloud and AI businesses. The company reported $81.3 billion in revenue, up 17% year over year. Microsoft Cloud revenue exceeded $51.5 billion, rising 26%, while Azure and other cloud services grew about 39%, remaining the company’s primary growth engine.
CEO Satya Nadella said during the earnings call that Microsoft has already built a sizable AI business and that the industry is still in the early stages of AI adoption. As generative AI expands across enterprises, Azure is becoming a key infrastructure platform for AI training and inference. At the same time, Microsoft is embedding Copilot capabilities across products such as Office and Teams, enabling the company to monetize AI through its existing enterprise software ecosystem.
However, the AI expansion is also accompanied by significant capital expenditures. Microsoft is investing heavily in data centers and GPU infrastructure to support rising demand for AI computing. While these investments could pressure margins in the short term, they are widely viewed as strategic spending aimed at securing a leading position in the global AI infrastructure race.
From a stock-price perspective, Microsoft reached a record high of $555.45 in 2025. The shares later pulled back amid broader volatility in technology stocks and investor concerns about the pace of AI returns, falling to around $410, a decline of more than 25%. This correction may have created an opportunity for long-term investors to reposition in one of the market’s leading AI beneficiaries.
Conclusion
The recent wave of large long-dated Microsoft options trades—worth well over $100 million in premium—suggests that some investors are betting the AI cycle will continue to drive the company’s stock higher. After retreating from its $555 peak to around $410, Microsoft is once again attracting attention from long-term capital.
For investors, the signal from the options market is clear: as AI commercialization gradually accelerates, Microsoft remains one of the technology sector’s most compelling long-term beneficiaries. Over the coming years, the growth trajectory of Azure and the commercialization of AI products such as Copilot are likely to be key factors determining the company’s future valuation and stock performance.
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