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

• MSFT trades at $487.03, up 0.44% with volume surging past 7.1M shares.
• Options open interest shows 128K calls vs 89K puts, with $500 calls dominating this Friday’s expiry.
• Analysts from Evercore and Wedbush see $600+ price targets, citing Azure’s AI-driven growth.

Here’s the takeaway: MSFT is perched on a bullish edge. Options data and technicals align on a near-term upside bias, but long-term range-bound risks linger. Let’s break it down.

Bullish OI Clusters and Whale Moves

Options market makers are eyeing the $500 strike like a magnet. This Friday’s expiry sees 6,780 open interest in $500 calls—the highest of any strike—while $490 and $505 calls trail closely. That’s not random. It suggests institutional players are hedging or scaling up for a potential breakout above $500, a level last tested in late 2024.

On the put side, $470 and $450 strikes dominate, but the put/call ratio of 0.696 tells a clear story: bulls are in control. Yet, don’t ignore the block trades. A $300K trade in MSFT20251031P510 (a put expiring Oct 31) and a $93K sale of MSFT20250926P490 (Sept expiry) hint at mixed positioning. The former could signal a hedge against a short-term dip, while the latter might reflect profit-taking from a prior bearish bet.

News That Fuels the Fire

Microsoft isn’t just a tech stock—it’s a cash-cow in the AI arms race. Evercore and Wedbush aren’t just throwing out $600 price targets; they’re betting on Azure’s 30%+ growth and Copilot’s monetization. With a $392B commercial backlog and 70% of its installed base set to adopt AI in three years, the fundamentals are stacked. But here’s the catch: the market still underestimates how fast Azure’s AI revenue could surge. If the $490–$500 support holds, this stock could rocket past $520 by Q1 2026.

Trade Ideas: Calls, Breakouts, and Precision Entries

For options traders, the MSFT20260102C500 (next Friday’s $500 call) is a no-brainer. With 3,294 open interest and a strike just 2.6% above current price, it balances leverage and probability. If MSFT cracks $495 this week (a 1.6% move), consider adding the MSFT20260102C490 for a cheaper, higher-odds play. Both benefit from the RBC and Wedbush price targets and the Bollinger Band squeeze.

Stock buyers should wait for a pullback to $478–$479 (30D support) before entering. A close above $508 (200D resistance) would validate the breakout, with a first target at $520 (24% upside). Use the 200D MA at $474.48 as a hard stop—below that, the bullish case weakens.

Volatility on the Horizon

MSFT isn’t a straight-line trade. The long-term 200D MA vs 100D MA divergence warns of range-bound risks if AI hype falters. But for now, the options market and analysts are all-in. This is a stock where patience and precision pay off—especially with the $500 level acting as both a psychological and technical fulcrum. Keep an eye on OpenAI’s performance and Xbox’s turnaround; they’re wild cards in this $600+ story.