Traders are positioning for good quarterly results from Microsoft next week.
Investitute’s tracking systems today identified the purchase of 5,600 Weekly $66 calls that expire on April 28, the day after the software giant reports earnings, for $0.94 to $1.15. Volume was well above the strike’s open interest of 3,720 contracts, indicating that this is new positioning. Shares were trading around $65.34 at the time.
These long calls lock in the price where Microsoft’s stock can be purchased, gaining with a rally and providing leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or declines.
MSFT was down 0.14 percent to close at $65.39 today. Shares pulled back after the last quarterly report in late January–even though the company beat estimates on the top and bottom lines–but they have since recovered most of that ground.
Microsoft’s next earnings report is scheduled for Thursday, April 27, after the market closes.