Dan Nathan spoke on CNBC's Options Action about options trading in Microsoft Corporation MSFT ahead of earnings.
He said that the options market is implying a move of 5 percent in either direction and the stock has moved around 7 percent in the last four quarters on earnings. Its average move on earnings in the last 10 years is around 4.5 percent.
Nathan explained that a 5 percent move higher on earnings in Microsoft would mean that the stock would reach a new all-time high. A drop of 5 percent would mean a pull back to its 200-day moving average.
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