MSFT Options Signal Bullish Bias at $520 OI, But $450 Puts Warn of Volatility – Here’s How to Play It

• MSFT trades at $478.19, down 0.23% from its 52-week high of $512.07
• Options data shows 33,620 open calls at $520 (10% OTM) vs. 19,728 puts at $450 (6% OTM)
• Block trade of 250 MSFT20260618P500 puts hints at hedging ahead of June

The market is sending a clear message: investors are betting on a sharp rebound in Microsoft’s stock price, but they’re also bracing for a potential pullback. With the put/call ratio at 0.696 (calls dominate), and heavy open interest at $520 calls and $450 puts, we’re seeing a classic "bullish with caution" setup. The key question is whether Microsoft’s AI-driven momentum can overcome near-term volatility.

Bullish OI at $520 vs. Bearish Puts at $450: A Tale of Two Scenarios

The options market is split between two narratives. On the bullish side, 33,620 open calls at $520 (10% OTM) suggest traders expect a sharp rally before Friday’s expiration. This strike aligns with the 30D resistance level of $508.32, making it a psychological hurdle for the stock. Meanwhile, the $450 puts (6% OTM) with 19,728 open contracts indicate hedging activity—investors are buying downside protection as Microsoft’s 200D MA at $480.22 acts as a near-term floor.

The block trade of 250 MSFT20260618P500 puts ($500 strike, expiring June 18) adds intrigue. This trade—worth $1.025 million—could signal large players hedging against a potential earnings miss or regulatory headwinds. But the sheer volume of calls at $520 suggests the market still believes in Microsoft’s AI-driven growth story.

Goldman’s AI Thesis vs. Short-Term Volatility

Goldman Sachs’ recent upgrade to Buy with a $655 target (36% upside) is fueling optimism. The firm highlights Microsoft’s 66% CAGR in Azure AI revenue and its 27% stake in OpenAI as key drivers. However, recent news about AI PC sales missing expectations and insider selling ($27.6M in shares sold by executives) introduces short-term uncertainty.

The good news? Microsoft’s institutional ownership remains strong (71.13%), and its 35.71% net margin gives it room to absorb short-term costs. The recent launch of agentic AI tools for retailers and the PayPal partnership could offset hardware-related jitters by expanding Azure’s monetization avenues.

Actionable Trade Ideas: Calls at $510, Puts at $460

For options traders, the MSFT20260123C510 call (expiring Friday, $510 strike) offers a high-conviction play. With 7,384 open contracts and the stock trading near its 200D MA, a break above $481.50 (middle Bollinger Band) could trigger a rally toward $510. If you’re more conservative, the MSFT20260123P460 put (2,417 OI) provides downside protection at a 6% OTM level.

Stock traders should consider entry near $478 if the 200D MA holds. A break above $481.50 (middle Bollinger Band) could target $490 (RSI 44 suggests oversold conditions), while a drop below $471.16 (lower Bollinger Band) would test the 30D support at $478.22.

Volatility on the Horizon: Balancing AI Optimism and Near-Term Risks

Microsoft’s long-term story remains intact—its AI ecosystem and cloud dominance are hard to ignore. But the near-term path is bumpy. The $520 call OI and $450 put OI create a tightrope: bulls need a breakout above $508.32 to validate the bullish thesis, while bears could trigger a test of $450 if Azure AI monetization stumbles. For now, the market is pricing in a 30% chance of a $520+ close by June, but the $450 puts are a reminder that patience is key. Trade with a plan, and let the data guide your decisions.