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Microsoft has a 'heads you win, tails you win' setup: Technician

Tech's moment of truth

Earnings season is in full swing this week as 104 S&P 500 companies and 12 Industrials are set to report.

Big names like Chipotle, Verizon, IBM, Coca-Cola, Boeing and Caterpillar are all on tap, but the real action comes on Thursday, when Alphabet, Amazon and Microsoft report.

The options market is expecting the three tech giants, which make up 21 percent of the Nasdaq 100, to move a combined 19 percent in either direction by Friday. That's a potential plus or minus $67 billion move in market cap. Options traders use at-the-money put and call strike prices to estimate how much a stock will move.

According to one technician, there's one name in particular that stands out as the clear winner: Microsoft. "It looks to my eye that Microsoft is setting up quite well for a breakout," Carter Worth said Friday on CNBC's "Options Action."

Looking at a longer-term chart of Microsoft, Worth noted that the stock has been consolidating. "We have this formation of tight trading, and the presumption is we are going to get somewhat of a [move higher]," added Cornerstone Macro's head of technical analysis. For Worth, the catalyst for the next leg higher could be a positive earnings event.

Worth pointed to the relative outperformance of rival Intel for additional perspective. "The correlation between Microsoft and Intel is quite high," he said. The company reported better-than-expected earnings and revenue last week, and is now up more than 34 percent from its Aug. 24 low.

Also factoring into Worth's positive thesis is Microsoft's 3 percent yield. As he believes the company's strong technicals coupled with the high yield makes it a "heads you win, tails you win kind of setup."

Microsoft is set to release its fiscal 2016 first-quarter earnings report on Thursday. Analysts polled by FactSet are expecting the company to earn 58 cents per share on $20.75 billion in revenue.