MSFT Options Signal $500 Bullish Battle: How to Play the AI Chip Shift and Earnings Rebound

• MSFT trades at $481.97, caught between 30D support ($477.72) and 200D resistance ($508.32).
• Options call OI dominates at $500 (11,267 contracts) and $485 (11,232), while puts cluster at $470 (6,376).
• Block trades hint at big money hedging: A $510 put (MSFT20251031P510) saw $300K turnover last month.

Here’s the takeaway: Options data and technicals point to a high-stakes test at $500—but the path there is anything but smooth. Let’s break it down.

The $500 Call Wall and Institutional Hedging

Options marketmakers are bracing for a fight. The MSFT20251205C500 call (this Friday’s $500 strike) has 11,267 open contracts—the highest on the board. That’s not just noise: it suggests smart money is pricing in a potential breakout above $483.40 (today’s high). But don’t ignore the puts. The MSFT20251205P470 put (6,376 OI) acts like a safety net for bears.

Then there’s the block trade action. A $510 put (MSFT20251031P510) saw 200 contracts traded for $300K last month. Think about it: someone’s hedging a large position against a drop below $466 (lower Bollinger Band). This isn’t just retail frenzy—it’s a sign of positioning for volatility.

News That Could Tip the Scales

Microsoft’s rumored shift to Broadcom for custom chips is a double-edged sword. On one hand, it removes a dependency on Marvell, which could stabilize MSFT’s supply chain. On the other, the AI sales concerns (reports of lowered targets) still linger. But here’s the twist: Los Angeles Capital Management just bought 161K shares, boosting its stake to 3.7M. That’s a vote of confidence in the core business, even if insiders sold $26M worth recently.

The key question: Will the chip transition be seen as a strategic win (boosting Azure margins) or a distraction? Right now, options traders are betting on the former—but they’re not ignoring the latter.

Trade Ideas: Calls, Puts, and Precision Entries

For the bullish case:

• Buy the MSFT20251205C500 if price breaks above $483.40. Target: $500 (strike price) to $510 (upper Bollinger Band).
• Bull call spread: Buy MSFT20251212C485 ($485 strike, next Friday) and sell MSFT20251212C500 to cap risk.

For the bearish hedge:

• Buy the MSFT20251205P470 if price dips below $479.12 (30D support). This protects against a drop to $466.

Stock traders:

• Entry near $477.72 (30D support) with a stop just below $475. Target: $490 (middle Bollinger Band at $491.80).
• Alternative: Sell short near $485 if resistance holds, targeting $475–$470.

Volatility on the Horizon

This isn’t a simple long or short play—it’s a chess match. The 0.63 put/call OI ratio shows calls dominate, but the RSI at 37.35 suggests oversold conditions. If Microsoft’s Q4 results (already strong at $77.67B revenue) hold up, the $500 level could be a springboard. But watch that 200D MA at $469.46: a break below it would trigger panic.

Bottom line: The options market is pricing in a $500 inflection point. Whether it’s a breakout or breakdown, the next few days will tell. For now, the call wall at $500 and block trades hint at a bullish bias—but don’t bet the farm. Stay nimble, and keep an eye on Broadcom’s stock as a proxy for MSFT’s chip strategy risks.