Downside trade aimed at Microsoft

Chris McKhann (chris.mckhann@optionmonster.com)
January 27, 2014

A bearish trade topped the option activity in Microsoft on Friday even though the stock was one of the few to show gains as the broader market sold off.

optionMONSTER's Depth Charge system shows that a trader bought 25,000 March 32 puts for the ask price $0.15 and sold 25,000 March 41 calls for the bid price of $0.14. The volume at both strikes was more than twice the previous open interest.

The combination trade is bearish because, if the stock falls, the puts will rise in value while the call premiums dwindle. It could be an outright bearish play or a protective collar on a long position. (See our Education section)

MSFT rose 2.08 percent on Friday to finish the week at $36.81 after issuing a strong quarterly report. The software giant peaked at $37.55 in the session and hit $38.98 in early December.

Total option volume in Microsoft reached 444,000 contracts on Friday, compared to a daily average of 91,871 in the last month. 

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