Options Trading News

September 6, 2013  Fri 4:14 AM CT

Microsoft dipped to a four-month low yesterday morning, and one trader is looking for a sharp move in the software giant's stock by next spring.

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.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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