MSFT Options Signal Bullish Bias: Key Strike Levels and AI-Driven Setup for 2026 Breakouts

• MSFT trades at $486.91, clinging to a 0.01% intraday gain amid a short-term bullish trend.
• Call open interest dominates at $500 strikes (7,143 contracts) for Friday’s expiration, while puts cluster at $470–$480.
• Wedbush’s $625 price target and AI infrastructure risks frame the narrative for this holiday trading session.

Here’s the takeaway: options data and technicals align on a bullish bias, but structural risks in AI overbuilding could create volatility. Let’s break it down.

What the Options Chain Reveals About Market Sentiment

The call/put open interest ratio (0.7) shows a clear tilt toward bullish positioning. For this Friday’s expiration, the $500 call (OI: 7,143) and $490 call (OI: 5,272) strikes are hotspots, suggesting institutional bets on a near-term push above Microsoft’s 200-day moving average ($475.02). Meanwhile, puts at $470 (OI: 3,855) and $480 (OI: 3,325) hint at defensive positioning if the stock dips below its 30-day support ($478.36).

Block trades add intrigue. A 200-lot put block at MSFT20251031P510 ($300K turnover) and a 600-lot put sale at MSFT20250926P490 ($93K) suggest mixed signals: some players are hedging against a pullback, while others are aggressively shorting higher strikes. This duality means a breakout above $490 could trigger rapid call buying, but a slip below $483.28 (middle Bollinger Band) might spark profit-taking.

How AI News Shapes the Trade Setup

Wedbush’s $625 target isn’t just a number—it’s a psychological catalyst. The firm’s emphasis on Azure’s 2026 growth aligns with the call-heavy options data, especially with Copilot’s $25B revenue potential factored in. But the "overbuilding" risk can’t be ignored. If Microsoft’s $22.6B AI CapEx doesn’t translate to proportional revenue, the stock could face margin pressure.

Investor perception is key here. Retail traders might chase the AI hype, pushing MSFT higher, while institutional investors could sell into strength if they view the $500+ calls as overpriced. The agentic AI strategy (Copilot Studio, Azure AI Foundry) adds long-term optimism, but regulatory scrutiny of autonomous agents could create near-term headwinds.

Actionable Trade Ideas for MSFT

For options traders, consider these setups:

• Bullish: Buy MSFT20260102C500 (next Friday’s $500 call) if MSFT closes above $487.19 (intraday high). Target a $495–$505 move, leveraging Wedbush’s $625 thesis as a long-term tailwind.
• Bearish: Buy MSFT20260102P480 (next Friday’s $480 put) if the stock tests 30-day support ($478.36). This hedges against a potential pullback from overextended AI bets.

For stock traders, watch these levels:

• Entry: Consider buying near $483.28 (middle Bollinger Band) if the 30-day support holds. A break above $490.8 (100D MA) would validate the bullish case.
• Targets: $495 (RSI neutrality) and $500 (key call strike). Stop-loss below $479.14 (30D support upper bound).

Volatility on the Horizon: Balancing AI Optimism and Structural Risks

Microsoft sits at a crossroads. The options market and Wedbush’s analysis lean heavily on AI-driven growth, but the $500+ call strikes require execution on Azure’s 2026 monetization. If the stock holds above $483.28, the path to $500 looks viable by January. However, the $470–$475 put strikes act as a warning: a breakdown here could reignite concerns about AI infrastructure costs.

Bottom line: This is a high-conviction trade for AI believers, but don’t ignore the block trades hinting at near-term profit-taking. Position yourself at key levels—calls at $500 for the long game, puts at $480 for downside protection—and let the data guide your exit. The next 10 days will tell if Microsoft’s AI story can outpace its capital-intensive reality.