Microsoft Stock Options Traders Are Betting The Pullback Is Over

Microsoft Corporation MSFT gapped down Tuesday, but the dip was immediately bought.

The gap down put Microsoft under a key level of support at $246, however, and by mid-afternoon the stock was rejecting that level as resistance.

Microsoft reached an all-time high of $263.19 in the run-up to its first-quarter 2021 earnings print. The following day, despite a big beat, Microsoft’s stock sold off almost 3% and has been in a downtrend since.

Microsoft options traders think the pullback is over and are betting the stock is headed higher over the next few weeks.

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

• At 9:30 a.m. Tuesday a trader executed a call sweep near the ask of 355 Microsoft options with a $250 strike price expiring on June 18. The trade represented a $175,370 bullish bet for which the trader paid $4.94 per option contract.
• At 10:15 a.m., a trader executed a call sweep above the ask of 200 Microsoft options with a $260 strike price expiring on June 18. The trade represented a $41,000 bullish bet for which the trader paid $2.05 per option contract.
• At 11:13 a.m., a trader executed a call sweep near the ask of 407 Microsoft options with a $260 strike price expiring on June 18. The trade represented a $86,284 bullish bet for which the trader paid $2.12 per option contract.
• At 11:15 a.m., a trader executed a call sweep near the ask of 394 Microsoft options with a $250 strike price expiring on June 18. The trade represented a $204,880 bullish bet for which the trader paid $5.20 per option contract.
• At 11:20 a.m., a trader executed a call sweep above the ask of 446 Microsoft options with a $260 strike price expiring on June 18. The trade represented a $103,472 bullish bet for which the trader paid $2.32 per option contract.
• At 11:20 a.m., a trader executed a call sweep above the ask of 616 Microsoft options with a $245 strike price expiring on June 18. The trade represented a $483,560 bullish bet for which the trader paid $7.85 per option contract.
• At 12:23 p.m., a trader executed a call sweep above the ask of 714 Microsoft options with a $265 strike price expiring on June 18. The trade represented a $204,880 bullish bet for which the trader paid $1.33 per option contract.

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 option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call 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.

MSFT Price Action: Shares of Microsoft were trading down 0.64% at $245.60 at last check.