MSFT Options Signal Bullish Bias: Key Strikes and Trade Setups for Dec 19–26 Expirations

• MSFT surges 2.14% to $486.30, trading near its 200-day MA of $473.16 and 30-day support at $478.36.
• Options market favors calls: 1.6M open interest in calls vs. 1.1M in puts, with heavy call OI at $500 and $585 strikes.
• Analysts target $631+: Mizuho and Morgan Stanley maintain Buy ratings with $640–$650 price goals.

The stock’s short-term bearish pattern clashes with a long-term bullish backdrop—and options traders are betting on a rebound.Bullish Imbalance in OTM Calls, Whale Activity at $510 Put

Options data tells a clear story: traders are pricing in a sharp rebound. The $500 call (MSFT20251219C500) and $585 call (MSFT20251219C585) dominate this Friday’s open interest, with 24,628 and 26,508 contracts outstanding, respectively. These strikes act as a "bull trap"—if MSFT breaks above $500, the $585 call could see explosive demand as momentum traders chase the move.

But it’s not all one-sided optimism. The $450 put (MSFT20251219P450) and $460 put (MSFT20251219P460) have 10,478 and 10,392 contracts open, hinting at hedging activity. The most telling block trade? A $300,000 sale of MSFT20251031P510 puts (200 contracts) in late October—suggesting a whale is betting on a $510 floor.

News Flow: Earnings Pop vs. Insider Caution

Microsoft’s $77.67B revenue and $27.75B net profit (up 18% YoY) justify the bullish options flow. Analysts love the Azure growth (28% YoY) and $400B in commercial commitments. Yet insider sales—like Bradford Smith’s $19.97M dump of 38,500 shares at $518.64—add nuance. These moves aren’t bearish signals per se, but they highlight that even insiders see near-term volatility.

Trade Ideas: Calls for Breakouts, Puts for ProtectionFor options traders: Buy the MSFT20251226C490 call (3,984 OI) if MSFT holds above $478.36 support. This strike gives you leverage if the stock gaps up on Monday. Alternatively, a bear put spread using the MSFT20251226P450 ($3,677 OI) and MSFT20251226P460 ($3,416 OI) could lock in 5–7% gains if the stock dips below $469.04 (lower Bollinger Band).For stock buyers: Consider entry near $478–479 if the 30-day support holds. Target $494.51 (upper Bollinger Band) as a short-term goal. A break above $500 would validate the call-heavy options thesis.Volatility on the Horizon: Balancing Bullish Momentum and Structural Risks

The stock sits at a crossroads. Technicals (RSI at 43.34, MACD near zero) suggest a rebound is due, but the 100-day MA at $507.66 looms as a psychological hurdle. Regulatory risks and AI infrastructure costs could cap upside, but Microsoft’s $3.54T market cap and 71% institutional ownership show resilience.

Final Take: This week’s options flow and analyst optimism point to a $500+ pivot. Play it with the MSFT20251226C490 call or a tight support-based stock entry. But keep a stop below $469.04—Bollinger Bands don’t lie.