MSFT Options Signal Bullish Bias: Key Strikes and AI-Driven Setup for Dec 12–19 Expiry

• MSFT drops 2.28% to $480.79, testing 200-day support at $477.72.
• Options OI shows 65% more bullish bias (call OI: 1.6M vs. put OI: 1.05M).
• $500–$525 calls and $475–$480 puts dominate near-term sentiment.
• $23B AI investments in India/Canada and Office 365 price hikes fuel long-term optimism.

Here’s the thing: MSFT’s price action and options data are painting a clear picture. The stock is clawing its way back from a sharp intraday drop, but the options market is betting on a rebound. Let’s break down why this could be a setup for traders to capitalize on—especially with key expiries this week and next.

Bullish OI Clusters and Whale Moves: What’s Cooking at $500 and $475?

The options chain is screaming “buy the dip” right now. For this Friday’s expiry (Dec 12), MSFT20251212C500 and MSFT20251212C510 have 8,029 and 6,050 open interest respectively. That’s heavy call buying at strikes just above current levels. Meanwhile, puts at MSFT20251212P475 (5,109 OI) and MSFT20251212P480 (4,589 OI) suggest traders are hedging against a potential breakdown below $480.

But here’s the kicker: next Friday’s expiry (Dec 19) has even more interesting dynamics. The MSFT20251219C585 contract has 26,562 open interest—nearly triple the next highest call. That’s a whale-sized bet on a sharp rally. Puts at MSFT20251219P460 (9,642 OI) and MSFT20251219P405 (9,572 OI) hint at deeper downside concerns, but the overall put/call ratio of 0.65 still favors bulls.

Block trades add intrigue. A $300K trade in MSFT20251031P510 (put) and a $93K sale in MSFT20250926P490 (put) suggest big players are hedging or unwinding older positions. It’s not a red flag, but it does mean volatility could spike as these positions roll into December expiries.

AI Investments and Pricing Power: Why the Market Might Ignore the Dip

Microsoft’s recent $23B AI push in India and Canada is more than just headlines. This isn’t speculative moonshot spending—it’s infrastructure for Azure’s dominance in the AI cloud race. The company’s plan to integrate Cohere’s models into Azure and expand data centers by late 2026 is a long-term play, but it also signals confidence in AI’s profitability.

Then there’s the Office 365 price hike. Yes, it’s a short-term annoyance for users, but it’s a masterstroke for Microsoft’s margins. Analysts are already penciling in $650–$675 price targets, betting on Microsoft’s ability to pass costs to customers without losing market share.

The bear case? AI ROI is still unproven, and the stock’s 34.9x P/E feels stretched. But the options market isn’t buying that narrative—yet.

Trade Ideas: Calls for the Rally, Puts for the Safety Net

For the bullish bet, consider buying MSFT20251219C500 (next Friday expiry) if the stock breaks above today’s high of $484.25. The $500 strike is a psychological level with heavy OI, and a close above $490 would validate the short-term bullish trend.

If you’re more cautious, a MSFT20251219P475 put could act as insurance. The 30D support level is just $477.72, and a breakdown below $475 would trigger more panic selling.

For stock traders:

• Entry near $479 (support zone) with a target at $490 if the 30D MA holds.
• Stop-loss below $475 to protect against a breakdown.

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

The next few days will test MSFT’s resolve. The stock is sitting on a knife edge—support at $477.72 and resistance at $490.11 (middle Bollinger Band). If the AI news and pricing power narrative wins out, we could see a rebound toward $500. But a breakdown would test the 200D MA at $470.65.

Bottom line: This is a high-conviction trade for bulls, but don’t ignore the puts. The options market isn’t all sunshine—those $460 and $405 puts are there for a reason. Stay nimble, and watch those key levels like a hawk.