Chart of the Day – MSFT: Party like it’s 1999?

by riskreversal October 19, 2016 3:51 pm • Chart of the Day

Event: MSFT will report their fiscal Q1 after the close tomorrow. The implied move in the options market is about 5% in either direction, below the 4 qtr average one day post earnings move of 7%. With the stock at $57.50, the Oct 21st weekly 57.5o straddle (the call premium + the put premium) is offered at about $2.50, if you bought that and thus the implied earnings move you would need a rally above $60 or a decline below $55 to make money. To put the implied move in perspective, that’s a $22 billion in either direction.  Since the stock gapped higher on Q4 earnings in July, the stock has consolidated between $56 and $58.25:


What’s amazing long term is the stock is really close to it’s all time high. When did that come? You have to go in the way back machine to a day before New Years eve… Y2k. That 1999 high was $59.97!


That’s a really close historical target and before this market cycle is all said and done, one would think this baby is going to touch that and make a new high. And in fact, the implied move on this earnings of 5% basically puts that 1999 high in play. What happens from then is really dependent on the broader market but there will be sure to be some spooky headlines looking back.

We’ll circle back tomorrow with some thoughts for those that are long, looking to play a breakout, or looking to exit before it’s party over oops, outta time.