MSFT Options Signal Bullish Bias: Target $520 Calls as Cloud Growth Fuels Short-Term Upside

• Microsoft’s Q4 earnings beat and $20B buyback plan boost call options demand

• Put/call ratio of 0.7 highlights aggressive bullish positioning ahead of expiry

• Price near 200D MA at $480.66 offers strategic entry point for longs

Here’s what the options market and fundamentals are telling us: Microsoft is sitting at a crossroads. The stock’s 0.8% drop today hasn’t shaken bullish conviction—call open interest is 45% higher than puts. With Azure’s cloud market share hitting 22% and AI-driven revenue streams accelerating, traders are pricing in a breakout above $500.

Bullish Options Imbalance Points to $520 Target

Let’s start with the numbers: 34,067 open contracts at the MSFT20260116C520 strike (this Friday’s expiry) dwarf the nearest put at $450 (20,520 OI). That’s not just noise—it’s a crowd betting on a 9.8% move higher. The put/call ratio of 0.70 means every $1 of bearish bets is backing $1.43 of bullish ones.

But don’t ignore the risks. While the RSI at 38.87 suggests oversold conditions, the MACD histogram (-2.96) still shows bearish momentum. The key battleground is the 200D MA at $480.66. If that breaks, the $470 support level (lower Bollinger Band) becomes critical. No major block trades today, but the next Friday’s $500 call (7,844 OI) hints at extended positioning.

Earnings Pop vs. Regulatory Headwinds

Microsoft’s Q4 beat—$58.6B revenue, $22.1B net income—proves its AI pivot is working. The Azure AI Enterprise Suite and SecureX acquisition are concrete plays in a $100B+ market. Yet the EU antitrust probe and Surface Neo delay introduce near-term volatility.

This duality explains the options action: investors are hedging short-term risks with puts (notably $450 strikes) while loading up on calls. The $20B buyback program adds another layer—reduced shares outstanding could juice earnings power if the stock holds above $470.

Trade Ideas: Calls for Breakouts, Longs for MA Rebound

For options traders: Buy the MSFT20260116C520 call (this Friday expiry). With 34,067 contracts open, this strike has become a self-fulfilling prophecy. If the stock gaps up, the 1.4% premium offers 20%+ return in 3 days. For a safer play, sell the MSFT20260123P450 put (next Friday expiry) to collect premium while capping downside risk.

Stock traders: Consider entry near $473.39 (current price) if the 200D MA holds. First target is the 30D MA at $478.22, then the $500 level where 7,844 OI awaits. Stop-loss below $470 would protect against a breakdown. For bears, a short-term put spread at $450-460 could profit if the stock gaps down pre-earnings.

Volatility on the Horizon

Microsoft’s story is a tug-of-war between AI-driven growth and regulatory friction. The options market has already priced in a $520 ceiling for this cycle. If the stock cracks that level by Friday, the 200D MA becomes a floor for a $500+ base. But watch the EU probe—any escalation could trigger a $450 test. This is a stock where fundamentals and options sentiment align for a bullish breakout, but patience is key to avoid getting whipsawed by short-term noise.