Options Alert: New Highs Coming for Microsoft?

Microsoft's AI story might be coming together, and one big options trader is positioning for more upside.

This large transaction was detected yesterday morning in the software giant:

• 29,736 September 525 calls were purchased for $10.56.
• 29,736 September 570 calls were sold for $2.58.

The trades occurred at the same time in equal-sized blocks and volume was more than 15 times open interest in both strikes. That suggests new positions were implemented.

Calls fix the price where a security can be purchased. They can appreciate when shares gain value and expire worthless if the stock doesn't climb enough. Thursday's position was apparently a vertical spread, which involves selling one contract to reduce the cost of owning another.

The strategy cost $7.98 and could expand to $45 if the stock closes at $570 or higher on expiration. That's a potential gain of 464 percent from the shares appreciating 15 percent.

MSFT rose 2.6 percent to $499.97 yesterday. It's been consolidating after quarterly results triggered a historic rally on July 30.

The reported not only better-than-expected earnings, revenue and guidance. Azure's growth also validated aggressive capital spending and Copilot's surge in usage suggested the company may be on the verge of monetizing agentic AI. 

Interestingly, MSFT has never traded above $556. So Thursday's option trader seems to think the fundamental improvement could trigger a breakout to new all-time highs before the third Friday of next month.

Overall option volume was about average in the name, according to TradeStation data. Calls accounted for a bullish 71 percent of the total.

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