MSFT Options Signal Bullish Breakout Potential: Key Strikes and Block Trades to Watch

• MSFT trades at $489.51, up 1.3% with volume surging to 11.9M shares.
• Options data shows call open interest dominates (put/call ratio: 0.64) with heavy positioning at $500 and $505 strikes.
• Block trades hint at bearish hedging, while Jefferies’ $490 price target reinforces cloud-driven optimism.

Here’s the takeaway: Microsoft shows clear upside potential today. The stock is clawing toward its 30D moving average while options data and technicals align for a bullish breakout—provided support at $477 holds. Let’s break down why this setup matters.

Bullish Calls Stack Up, But Puts Signal Caution

The options market is all over MSFT’s next move. For Friday’s expirations (Dec 12), MSFT20251212C500 and MSFT20251212C490 dominate call open interest, with 5,623 and 5,237 contracts outstanding. That’s not just noise—it’s a crowd betting Microsoft will punch through $500. Meanwhile, puts at $475 (MSFT20251212P475) and $480 (MSFT20251212P480) show traders aren’t ignoring the risk of a pullback.

But the real fireworks are next week. MSFT20251219C500 (21,851 OI) and MSFT20251219C585 (26,563 OI) suggest big players are eyeing a sharp rally. The $585 strike is 15% above today’s price—aggressive, but not impossible if cloud demand keeps surging.

Block trades add intrigue. A 200-lot sale of MSFT20251031P510 (unknown direction) and a 600-lot MSFT20250926P490 sale hint at hedging activity. Think of it like a captain securing the lifeboats before a storm—someone’s bracing for volatility.

News Flow: Strategic Shifts and AI Momentum

Microsoft’s rumored pivot to Broadcom for custom chips is a double-edged sword. Short-term, it rattled Marvell’s stock and boosted Broadcom’s, but for MSFT itself, this is a long-term play. The real driver today is Jefferies’ reaffirmed $490 price target. With Azure revenue growing 26% YoY and AI capacity expanding 80% in 2025, the fundamentals are firing on all cylinders.

Here’s the catch: investors might overreact to the chip news. A shift in suppliers could delay near-term hardware rollouts, creating a temporary headwind. But the options data suggests the market already prices in this risk—puts are active, but calls still dominate.

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

For options traders, the most compelling plays are:

• MSFT20251212C490 (490 call, expiring Friday): Buy if MSFT breaks above $492.30 (intraday high). Target $505, where 3,536 contracts are waiting to profit.
• MSFT20251219C500 (500 call, next Friday): A longer-term bet if the stock holds above $484.38 (intraday low). Jefferies’ $490 target makes this a low-risk entry.

For stock traders, consider:

• Entry near $477.72 (30D support) with a stop just below $475. If MSFT holds here, target $508.32 (200D resistance) as a key breakout level.
• Alternatively, fade the hype with a short near $495 (Bollinger upper band at $516.98) if RSI (34) fails to push above 40.

Volatility on the Horizon: Positioning for MSFT’s Next Move

The coming days will test Microsoft’s resolve. A close above $495 would validate the bullish case, triggering a run at $508. But watch that RSI—if it dips below 30 again, the rally could stall. For now, the options market and technicals are in sync: calls are stacked at key strikes, and the stock is perched on the edge of a breakout. This isn’t a high-risk gamble—it’s a calculated bet on Microsoft’s AI-driven momentum. Just keep that safety net of puts handy… just in case.