MSFT – Microsoft Corporation – The software giant could not escape the wrath of bearish options players today with its shares falling 1.60% to trade at $25.36 ahead of the final bell. Pessimistic investors expecting Microsoft’s shares to continue to decline ahead of August expiration sold call options and purchased puts. Options traders shed 3,100 calls at the August $29 strike for a premium of $0.13 apiece, and sold another 1,200 calls at the lower August $28 strike for an average premium of $0.27 each. Call selling spread to the August $27 strike where another 3,400 contracts were sold for an average premium of $0.85 a-pop. Investors may be throwing in the towel on MSFT, that is selling-to-close previously established long call positions, or traders may be selling the calls outright to pocket available premium. If the latter is true, call sellers keep the full premium received today if MSFT’s shares fail to rally above the strike prices described through August expiration day. Finally, traders anticipating continued erosion in the price of the underlying stock purchased 3,500 puts at the August $23 strike for an average premium of $0.49 per contract. Put buyers make money if the software maker’s shares drop 11.2% lower to trade beneath the average breakeven point to the downside at $22.51 by expiration day.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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