High Volume of Microsoft Call Options Purchased by Traders

Microsoft Co. (NASDAQ:MSFT - Get Free Report) experienced a notable surge in options trading on Tuesday, with investors purchasing a significant total of 355,575 call options. This figure marks a 29% increase over the usual daily volume, which is around 274,666 call options.

Insider Activity at Microsoft

In recent insider news, Microsoft CEO Satya Nadella sold 14,398 shares of the company stock on August 23rd, at an average price of $417.41. This sale amounted to approximately $6 million. Post-transaction, Nadella still holds 786,933 shares valued at around $328 million, reflecting no change in his overall position. Additionally, insider Bradford L. Smith sold 40,000 shares on September 9th at an average of $402.59, totaling about $16 million. After this sale, Smith’s direct ownership in the company stands at 544,847 shares, worth around $219 million. Over the last three months, insiders have sold a total of 190,629 shares valued at approximately $78 million, and corporate insiders currently own about 0.03% of the company's stock.

Hedge Fund Activity in Microsoft

Multiple large investors have recently altered their stakes in Microsoft. For instance, Banque Cantonale Vaudoise increased its position by 1.8%, acquiring an additional 5,044 shares to reach 282,295. Similarly, Wedmont Private Capital boosted its holdings by 5.1%, now owning 80,247 shares. Bank of New Hampshire also raised its stake by 15.5%, while Grassi Investment Management and Grandview Asset Management had smaller increases. Currently, hedge funds and institutional investors own approximately 71.13% of Microsoft’s shares.

Analyst Ratings and Forecasts

Research analysts have been active in reviewing Microsoft’s performance. TD Cowen recently raised its price target from $470.00 to $495.00, maintaining a "buy" rating. Royal Bank of Canada mirrored this sentiment with an "outperform" rating and a $500.00 target. While Wells Fargo reiterated its "buy" rating, Citigroup adjusted its target downward from $520.00 to $500.00. According to MarketBeat data, Microsoft has a consensus rating of "Moderate Buy" and an average price target of $495.68, with a notable number of analysts recommending the stock as a buy.

Microsoft's Stock Performance

On Tuesday, shares of Microsoft (NASDAQ:MSFT) rose by 2.1%, priced at $427.51 during mid-day trading. The trading volume reached over 23 million shares, exceeding its average of 20 million. The current 50-day moving average is $419.90, while the 200-day moving average is $424.55. Microsoft has shown impressive resilience, with its market cap at approximately $3.18 trillion and a price-to-earnings (P/E) ratio of 37.05. The stock has seen a low of $324.39 and a high of $468.35 over the past year.

Recent Earnings Report

Microsoft reported its quarterly earnings results on July 30th, revealing earnings per share (EPS) of $2.95, slightly above analysts' estimates. Revenue for the quarter was $64.73 billion, representing a 15.2% year-over-year increase. Analysts project that the company will achieve an EPS of 13.02 for the current fiscal year.

Share Buyback Plan and Dividend Increase

On September 16th, Microsoft’s board approved a buyback plan allowing the company to repurchase $60 billion of its stock. This plan suggests management's belief that the shares are undervalued. Additionally, Microsoft recently announced a dividend of $0.83 per share, set to be paid on December 12th. This marks an increase from the previous dividend of $0.75, and represents a yield of 0.78%.

About Microsoft Corporation

Microsoft Corporation develops and supports a wide range of software, services, devices, and solutions globally. Its productivity segment includes Microsoft 365, Teams, and other business tools.

Microsoft, Options, Trading