MSFT Options Signal Bullish Bias: Target $500+ as AI Momentum Builds

• MSFT trades at $488.17, up 0.27% with volume surging past 4 million shares.
• Options call open interest dominates at strikes like $500 and $490 ahead of Friday’s expiry.
• Block trades hint at big money positioning in puts and calls, aligning with Nadella’s AI push.

Here’s the thing: Microsoft’s options market is whispering a story of cautious optimism. With calls outpacing puts by a 1.43:1 ratio and key resistance levels in focus, the data suggests a potential breakout attempt—but timing and risk management matter.

Bullish Sentiment Locked in OTM Calls, Block Trades Add Mystery

The options chain for this Friday (Dec 26) shows MSFT20251226C500 and MSFT20251226C490 leading with 7,143 and 5,272 open contracts. That’s not just noise—it’s a vote of confidence from institutional players betting on a push above $500. Meanwhile, the put side is quieter, with MSFT20251226P470 (3,855 OI) and MSFT20251226P480 (3,325 OI) guarding the downside.

But here’s the twist: a recent block trade of 200 contracts in MSFT20251031P510 (unknown direction) and 600 puts sold in MSFT20250926P490 adds intrigue. Big money might be hedging or accumulating premium, but the call-heavy setup still screams "price is testing a ceiling, not a floor."

Nadella’s AI Gambit: Why Analysts Are Cheering

Microsoft’s fundamentals are lining up with the options action. Satya Nadella taking direct control of AI initiatives isn’t just a headline—it’s a signal that the company’s all-in on competing with OpenAI and Google. Analysts like Wedbush’s Daniel Ives are doubling down, calling Azure’s 2026 growth "underestimated" despite skepticism over AI spending.

This matters. When a CEO like Nadella becomes a "chief AI product driver," it reshapes investor perception. The market isn’t just betting on Microsoft’s current cloud dominance; it’s pricing in a future where Azure’s AI tools could redefine enterprise software. That kind of narrative fuels call buying, especially when technicals like the 30-day MA ($487.06) and RSI (58.16) suggest momentum is building.

Trade Ideas: Calls for the Bold, Stock for the Patient

For options traders:

• Aggressive play: Buy MSFT20251226C500 (Dec 26 expiry) if MSFT breaks above $492. The $500 strike is a psychological hurdle with heavy open interest—success here could trigger a cascade of covering buys.
• Lower-risk bet: Use MSFT20260102C505 (next Friday expiry) as a time-locked leveraged play. The $505 strike sits just above the 100-day MA ($506.24), where a breakout could validate long-term bullish trends.

For stock investors:

• Entry near $485–$487 (current price range) with a target at $508–$512 (200-day resistance). If MSFT holds above the lower Bollinger Band ($472.14), it’s a green light to add.
• Stop-loss at $478–$479 (30-day support) to protect against a breakdown.

Volatility on the Horizon: What to Watch

The next 72 hours will be critical. If MSFT closes above $490, the $500 call strikes could ignite a short-term rally. But don’t ignore the puts—MSFT20251226P470 and MSFT20260102P450 suggest some players are bracing for a pullback. The key is balance: this isn’t a one-way bet, but the data leans decisively bullish.

Bottom line? Microsoft’s options market is painting a picture of a stock on the cusp. The AI narrative, technical setup, and options flow all point to a potential breakout—but patience and discipline will separate winners from the crowd.