Traders claimed that after Microsoft has surpassed analysts' estimates on the earnings of its top and bottom lines, the company's stocks could rise up to nine percent in the next months of 2020.
Since the release of reporting reports, Microsoft shares skyrocketed to a ten percent increase amounting to 74 percent since 2019. The significant gains urged options traders to forecast an additional rise of nine percent on their market shares for the rest of 2020.
The initial analyst earnings estimates were lodged at 14 percent for the tech giant yielding a 1.51 USD per share. However, Microsoft's revenue beat the estimates by almost 3.5 percent after it generated 36.91 billion USD. Investors then claimed that its computing unit Azure and its social media platform LinkedIn contributed most to its earnings.
Microsoft's stock value for Azure grew by 62 percent while LinkedIn's increased by 24 percent. Open interest levels for June 19, 2020, showed that it has generated 195 USD call options indicating an increase of 18,000 contracts until February 6, 2020, alone.
The data showed that trade on the ASK for about 5 USD per contract was a sign that more traders bought the options after a showing of the improvements. Others bet that the stock price might rise to 200 USD or more if such contracts would push through until their expiration dates.
The traders laid out about nine million USD as the wager. Assuming that the stock cannot rise above its strike price by the expiration date, the traders were said to lose their entire bet for the next trading season. The values also indicated that there would be a nine percent increase from the share's current price yielding 183.90 USD by February 7 to prevent the loss.
It was also shown that the open interest for the 190 USD calls for expiration by April 17, 2020, also increased to 17,200 contracts last February 5, 2020. These were traded for 2.85 USD per contract. The report claimed that the stock would also need to rise to a value of 192.85 USD for the trader to earn a profit. It was said that the traders who bet on this laid out a value of about 4.9 million USD.
It was explained that Microsoft's cloud business unit also showed healthy revenue growth after increasing its value to almost 27 percent in the quarter. It is now valued at 11.9 billion USD. On the other hand, the company's productivity and business processes also increased by 17 percent to 11.8 billion USD while its personal computing sector garnered only a 1.7 percent increase to 13.2 billion USD.
In other news, Riverton Roll reported that several institutional investors have decreased their position in shares with Microsoft. These were Pacific Wealth Strategies Group Inc. and Arvest Bank Trust Division.
However, Winthrop Group LLC increased its stake in shares of Microsoft by 0.5 percent during the fourth quarter of 2019 including Moon Capital Management LLC who increased theirs by 3.5 percent. Addison Capital Co. and VeraBank N.A. who boosted their shares by 0.6 percent and 0.3 percent, respectively, joined them.
