Last time Microsoft reported earnings, the stock had its biggest one-day plunge in over 18 months. But as the tech giant gears up to report results on Thursday, some are betting that the worst is behind it.
On Monday, when options volume was about 2½ times its daily average, a trader made a very large purchase of call options expiring in May. Specifically, the trader bought 25,000 contracts of the May 44-strike calls for 47 cents each.
But according to Dan Nathan, co-founder of RiskReversal.com, there's more than meets the eye on this particular trade.
"These were marked closing," said Nathan, who noted that the trader was getting out of an existing position, not taking on a new bet. When traders buy calls, they are making bullish bets. But when they sell calls short, they are taking a bearish position.