Microsoft Corporation (MSFT) has launched new options trading today for contracts expiring on June 29, 2023. A noteworthy put contract at the $395.00 strike price has a current bid of $6.05, which, if sold to open, would commit an investor to purchase shares at $395.00, lowering their effective cost basis to approximately $388.95, compared to the current trading price of $397.74. The put has a 57% chance of expiring worthless, offering a potential return of 1.53% or 39.93% annualized on the cash commitment if it does.
On the call side, a $400.00 strike price contract is available with a current bid of $8.70. If an investor buys shares at $397.74 and sells this call as a covered call, they would commit to sell at $400.00, potentially yielding a total return of 2.76% by expiration. This call also has a 52% chance of expiring worthless, providing a possible 2.19% extra return or 57.03% annualized if it does.
The implied volatility for both examples is approximately 31%, while Microsoft’s actual trailing twelve-month volatility is calculated at 26%.
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