Microsoft (MSFT, news, chart, volatility) options are active and implied volatility is elevated ahead of earnings. The stock is down 48 cents to $21.05 and 130,000 puts and 190,000 calls have traded thus far. 30 analysts cover MSFT and the range of estimates is for earnings per share between 45 and 49 cents. Consensus is 47 cents. Microsoft posted 46 cents per share in the previous quarter, which missed by a penny. Shares are down 23.5 percent since that time. The options market is priced for some potential volatility this time as well. Implied vols in November options is 81.3 percent, compared to 71.3 in December, which implies a possible earnings gap move of $3.25, or roughly 15 percent, when Microsoft reports earnings after the closing bell.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.