Sharp move expected in Microsoft
Chris McKhann | firstname.lastname@example.org
optionMONSTER systems show that a trader purchased blocks of 7,000 April 29 puts for $1.58 and April calls for $1.86. Almost an hour later, another 6,500 contracts changed hands at each strike for $1.59 and $1.84 respectively. Volumes were well above previous open interest, indicating that this is a new positioning.
The trade, known as strangle, cost about $3.44. The position is designed to profit from higher volatility and/or a big move in either direction by the stock through mid-April. (See our Education section)
MSFT was up fractionally yesterday to close at $31.24 after dipping to a morrning low of $31.02, its worst price since April. Shares gapped above $35 on Aug. 23 with the announcement of CEO Steve Ballmer's resignation but has been falling steadily since.