To The Moon

Judging from the stock price performance,$Microsoft (MSFT) $It has weakened significantly in the last week. After peaking around $480.99 in mid-January, the stock price continued to fall, hitting a low of $455.90, and the short-term pullback/retracement was close to 5%. The decline was significantly enlarged on January 13th and 14th, and the average daily trading volume of about 23 million shares and the proportion of short transactions increased, reflecting the concentrated release of short-term selling pressure and the prominent characteristics of emotional selling.

The background of the decline mainly comes from external disturbances in the AI industry chain, including rising expectations of energy costs and carbon emission policies, which has caused the market to reassess the cost pressures of large technology companies in the expansion of AI infrastructure. At the same time, the overall weakening of Nasdaq and the phased outflow of funds from the technology sector have also amplified Microsoft's adjustment range. Although Copilot's short-term dysfunction in North America has been repaired, it still disturbs short-term confidence amid fragile emotions.

It is worth noting that from a technical perspective, Microsoft has begun to show obvious oversold characteristics. The stock price dropped rapidly in a short period of time, the momentum indicator weakened, and some selling pressure prefer trading rather than fundamental changes. This kind of concentrated decline is often easy to trigger technical repairs at periodic lows. Superimposed on Microsoft's own sufficient liquidity and stable institutional positions, in the absence of new negative news, there is relatively limited room for continued unilateral decline.

Therefore, what deserves more attention at present is thatLikelihood of a Short-Term。 In the oversold range, the probability of short-term funds and quantitative strategies to cover rises. If the market sentiment stabilizes or the technology sector rotates and repairs, Microsoft is expected to take the lead in a wave of technical rebound. It needs to be emphasized that this rebound is more of a short-term game, and the judgment of medium-term adjustment still needs to be combined with the further evolution of energy costs and policy variables.

MSFT Bull Put Spread Options Strategy

1. Strategy structure

Investors inMicrosoft's (MSFT) PUT OptionsBuild aBull Put Spread Bull Put SpreadStrategy. The strategy passesSell higher strike price Put while buying lower strike price PutConstitute, belonging toLimited benefits, limited risksThe strategy of being on the side of the bull or shock is on the side of the bull.

(1) Sell with higher execution price Put (main source of income)

• Sell 1 strike priceK ₂ = 450Put of

• Premium received$2.93/Share

This Put is closer to the current stock price and is a major source of premium for the strategy. As long as MSFT expiration price≥ 450, the Put will be completely invalid, and investors can retain all premium rights.

(2) Buy a lower execution price Put (risk protection)

• Buy 1 share strike priceK ₁ = 445Put of

• Payment premium$1.83/Share

The role of this Put is to provide a hedge in the event of a significant decline in MSFT, therebyLock in the maximum loss, avoid the unlimited risk of selling Put naked.

(3) Put-side net income (per share)

Net premium = Sell Put − Buy Put = 2.93 − 1.83 =$1.10/share

Initial net income

on account of1 lot of options = 100 shares：

• Net premium (per share):$1.10

• Initial net income (per contract): = 1.10 × 100 =$110/contract

👉 The initial net income is the bull market put spread strategyMaximum potential profit。

3. Maximum profit

WhenMSFT Expiration Price ≥ 450Time:

• Both 445 Put and 450 Put are extra-price

• Both options lapse

Investors get maximum profits:

• Per share: $1.10

• Per contract: $110

4. Maximum loss

The largest loss occurs whenPut spread fully triggeredIn the case of, that is, MSFT falls significantly.

Strike spread width: = 450 − 445 =$5

Maximum loss (per share): = Strike spread − Net premium = 5 − 1.10 =$3.90/Share

Maximum loss (per contract): = 3.90 × 100 =$390/contract

📉 Conditions of occurrence:

• MSFT price to maturity ≤ 445

5. Break-even point

There is only one break-even point for bull put spreads:

Breakeven Price = Sell Put Strike Price − Net premium = 450 − 1.10 =448.90

Maturity judgment rules:

• MSFT > 448.90 → Earnings

• MSFT = 448.90 → No Profit, No Loss

• MSFT < 448.90 → Loss

6. Risk and return characteristics

• Maximum benefit: $110/contract (limited)

• Maximum loss: $390/contract (limited)

• Profit-loss ratio: Gain: Loss ≈ 110: 390 ≈1: 3.55

7. Strategic characteristics and applicable situations

Strategy Characteristics

• Bullish or shock bullish strategy

• MSFT is not required to rise sharply, as long as it doesn't fall significantly

• Receive time value by selling Put

• The maximum return and maximum risk can be determined when opening a position

• Compared withSelling Put naked,Risks are significantly controllable

Applicable situations

When investors judge:

• MSFT remains strong or high-level shock in the short term

• Fall below before expiration445-450 intervalLow probability of

• I hope to obtain stable premium returns on the premise of clear risk upper limit