New Microsoft Options: Opportunities Amid Market Fluctuations

Investors in Microsoft Corporation (Symbol: MSFT) are presented with fresh options today, set to expire on December 6th. Our analysis at Stock Options Channel has identified two noteworthy contracts in the options chain: one put and one call.

Put Options: A Strategic Buying Alternative

The put contract at the $420.00 strike price currently has a bid of $12.10. Selling this put contract requires an investor to commit to buying shares at $420.00 while receiving the premium upfront. This arrangement effectively lowers the cost basis to $407.90 per share (excluding broker commissions). For those keen on acquiring MSFT shares, this offers a compelling choice compared to today’s market price of $424.33/share.

Since the $420.00 strike price is about a 1% discount from the stock’s current trading price, there is a possibility that this put contract will expire worthless. With analytical data indicating a 59% chance of this occurrence, investors can monitor changes in these odds on our website, where we provide a detailed chart of such information. If the contract does expire worthless, selling the put would yield a 2.88% return on the cash commitment—or an annualized return of 24.43%, what we term YieldBoost.

Call Options: A Path to Potential Profit

On the call side, a contract at the $430.00 strike price is currently priced with a bid of $13.35. Investors considering purchasing MSFT stock at the current price of $424.33/share and simultaneously selling this call contract would commit to selling the shares at $430.00. This strategy could lead to a total return of 4.48%, assuming the stock is called away by the expiration date (again, before broker commissions). However, should MSFT share prices rise significantly, there is a risk of missing out on additional upside potential.

Evaluating the historical trading data for MSFT and understanding the company’s fundamentals will help in making informed decisions. The chart below illustrates MSFT’s trading history with the $430.00 strike highlighted in red:

As the $430.00 strike represents a 1% premium to the current trading price, the call could also expire worthless. In such a case, the investor retains both their stock and the premium. Currently, there’s a 51% chance of this happening, which can also be tracked over time on our website, including a chart of the trading history for the option contract. If the covered call expires worthless, the premium earned would translate into a 3.15% additional return or 26.68% annualized, which we also refer to as YieldBoost.

Market Insights: Volatility and Performance

For clarity, the implied volatility for the put contract stands at 28%, while the call contract has an implied volatility of 27%. Furthermore, our calculations show that the actual trailing twelve-month volatility, based on the last 251 trading days and today’s price of $424.33, is 19%. To explore more options contracts worth considering, visit StockOptionsChannel.com.

Top YieldBoost Calls of the Nasdaq 100 »

Also see:

• Bill Ackman Stock Picks
• IHE Options Chain
• MTW market cap history

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.