Large put strategy targets Microsoft


A large put trade is targeting Microsoft even as its shares rebound off nine-month lows.

MSFT is up 2.07 percent to trade at $29.14. The software giant was below $28 for most of last week after coming down from above $31 in the last month. It hadn't traded below $28 since the first two weeks of 2012.

optionMONSTER's systems show that a trader sold 5,200 December 28 puts for the bid price of $0.51 against open interest of more than 57,000. At the same time, he or she bought 5,200 February 28 puts for the ask price of $1.01 against open interest at that strike is just 1,508.

If the December puts were sold to close a position, this is a simple roll with the trader closing the nearer-month contracts to buy more time for the strategy to work. If those puts were sold to open a position, then this is a new calendar spread that would take a maximum profit if MSFT is right around $28 at the time of the first expiration. (See our Education section)

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