Microsoft (MSFT) is rallying to new 52-week highs and leading the Dow Jones Industrial Average to a triple-digit gain today. Shares are up $1.31 to $31.36 on turnover approaching 75 million shares. Options volume is more than double the usual. 239,000 calls and 153,000 puts traded on the software giant. Some players in the options market seem to be anticipating additional gains in the stock tomorrow, as the soon-to-expire Feb 31 calls are the most actives. 48,000 traded against 33,916 in open interest. Mar 31 and 32 calls are the next most actives and implied volatility in Microsoft options is rallying 10 percent to 21. The relative strength in the stock and high options volume is partly related to speculation of a possible rebalancing of the NASDAQ 100 following the recent surge in Apple shares. Market values are getting out of whack and could potentially result in an adjustment to the index — which would favor MSFT and others, while hurting AAPL. Yet, nothing official has been announced and it isn’t entirely clear if Apple’s percentage within the NASDAQ 100 has reached the threshold that would trigger a major adjustment to the index.
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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.