Options traders have favored Microsoft calls for weeks
Microsoft Corporation (NASDAQ:MSFT) is up 1% at $132.80 this morning, fresh off a record high of $133.29, after the big tech name revealed its newest Xbox system at the 2019 Electronic Entertainment Expo (E3). Dubbed "Project Scarlett," the console is reportedly four times more powerful than the Xbox One X. The launch -- planned for the 2020 holiday season -- will come alongside the release of "Halo Infinite."
On the charts, Microsoft stock has been surging, now up more than 41% from its late-December bottom of $93.96. And while the shares did pull back earlier this month, losses were contained at the equity's 80-day moving average, a trendline that previously served as resistance for MSFT in late 2018 and early 2019. Looking broader, the security has added 30% year-over-year.
Calls have been a popular pick among options traders in recent months. This is per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows Microsoft stock with a 50-day call/put volume ratio of 2.11, ranking in the 74th annual percentile. In other words, two calls have been purchased for every put during the past 10 weeks of trading, and the rate of call buying has been accelerated.
Regardless of whether it's calls or puts, now looks to be an attractive time to purchase premium on short-term MSFT options. The stock's Schaeffer's Volatility Index (SVI) of 20% registers in the 14th annual percentile, signaling relatively muted volatility expectations being priced in to near-term contracts at the moment.