Microsoft Stock Gears Up For A Run Higher, Options Traders Place Their Bets

Microsoft Corp MSFT on Sept. 1 announced it will hold an event on Sept. 22 but gave few details of what it plans to unveil.

The event is expected to showcase Microsoft’s new Surface line of products, which could include a new version of its surface duo tablet and a Surface laptop. The product line will be a direct competitor to Apple Inc.'s AAPL iPads and MacBooks.

On Tuesday, Microsoft’s stock dipped in line with the general markets, tested the 21-day exponential moving average as support and bounced. The move had Microsoft in the process of printing a bullish hammer candlestick on the daily chart, which could indicate higher prices are in the cards for Wednesday.

Options traders believe Microsoft has room to run higher and on Tuesday the option flow skewed heavily bullish with very few puts being purchased. Together the bullish options traders purchased over $425,504 worth of call contracts and most chose a strike price of $300.

See Also: Which Big Tech Player Was The Biggest Lobbying Spender In Europe?

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The MSFT Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:39 a.m., a trader executed a call sweep near the ask of 225 Microsoft options with a strike price of $300 expiring on Sept. 10. The trade represented a $42,300 bullish bet for which the trader paid $1.88 per option contract.
• At 10:11 a.m., a trader executed a call sweep near the ask of 208 Microsoft options with a strike price of $300 expiring on Sept. 10. The trade represented a $29,744 bullish bet for which the trader paid $1.43 per option contract.
• At 10:14 a.m., a trader executed a call sweep near the ask of 285 Microsoft options with a strike price of $300 expiring on Sept. 10. The trade represented a $40,755 bullish bet for which the trader paid $1.43 per option contract.
• At 10:20 a.m., a trader executed a call sweep near the ask of 200 Microsoft options with a strike price of $300 expiring on Sept. 10. The trade represented a $29,800 bullish bet for which the trader paid $1.49 per option contract.
• At 10:24 a.m., a trader executed a call sweep near the ask of 245 Microsoft options with a strike price of $300 expiring on Oct. 15. The trade represented a $167,825 bullish bet for which the trader paid $6.85 per option contract.
• At 10:50 a.m., a trader executed a call sweep near the ask of 200 Microsoft options with a strike price of $305 expiring on Sept. 17. The trade represented a $26,000 bullish bet for which the trader paid $1.30 per option contract.
• At 10:51 a.m., a trader executed a call sweep near the ask of 262 Microsoft options with a strike price of $300 expiring on Sept. 17. The trade represented a $89,080 bullish bet for which the trader paid $3.40 per option contract.

MSFT Price Action: Microsoft is trading around $300.66 at publication time.