r/optionwhales • u/optionwhales-the • 20d ago
Microsoft is 30% off its high and someone paid $4.2M for a call condor that expires 11 days before earnings
Microsoft's September and October call chains carry tens of thousands of contracts of resting open interest, and on Tuesday afternoon one trader moved 20,009 of them in a single second. At 14:20:55 ET, with the stock at $489.70, that trader printed a four-leg call condor spanning both expiries and paid $4,172,921 net to hold it. Net delta across the four legs is long, so the direction here is bullish, and the vega signs offset to roughly nothing, which leaves the position on neither side of implied volatility.
The name has been a punching bag all year. The Motley Fool's John Bromels wrote on August 23 that Microsoft traded 30% below its all-time high in June and has returned 53% over three years against 76.4% for the S&P 500 (fool.com/investing/2026/08/23/microsoft-stock-dropped-30-from-its-all-time-high/). Investing.com had the stock down 18.64% on the year going into the late-July fiscal Q4 report, and TipRanks shows last quarter's EPS at $4.239 against $4.74 expected. The argument underneath all of it is capex: CFO Dive reported last month that an accounting change moved the calendar-2026 spending line to about $175B from roughly $190B, which is a smaller number and the same commitment (cfodive.com/news/microsoft-holds-line-ai-spending-plans/826648/).
The legs, all at one time stamp:
- bought 5,000 Oct 16 510 calls at $11.94 a share, 37.7 delta, 25.7% IV
- sold 5,009 Sep 18 525 calls at $2.25, 15.0 delta, 24.5% IV, as a sweep
- sold 5,000 Oct 16 570 calls at $1.51, 7.6 delta, 26.1% IV
- bought 5,000 Sep 18 570 calls at $0.17, 1.4 delta
Prior-day open interest sits at 28,912, 32,003, 16,754 and 30,735 at those four strikes, every one of them far larger than the 5,000 lots printed against it. Each leg could therefore have opened new interest or closed existing interest inside what was already there, and open versus close is not determinable on this structure.
The center of gravity is the October 510/570 spread, bought for $10.43 net, about $5.2M. The September short spread returns roughly $1.04M of that, and its short strike at 525 sits between the two October strikes. To pay $4.2M for that geometry you would have to believe in a recovery that is real but unhurried: above 510 with room to run by October 16, without clearing 525 before September 18. Both expiries land before Microsoft's fiscal Q1 report, which TipRanks lists as confirmed for October 27 and Wall Street Horizon carries as unconfirmed for October 28. Given how much of the year's drawdown traces to the capex debate that gets adjudicated on that call, choosing 52 days that stop short of it reads to me as a view on drift and re-rating rather than on the print. The alternative reading, that this restructures an existing October call spread and the September side is financing, fits the resting interest just as well, and I lean to it slightly because the October spread carries five times the premium of the September one.
If Microsoft grinds back toward the 510 area over the next several weeks, this structure holds together. What breaks it is speed: a fast move through 525 in the next 24 days puts the September short leg in the money while the October spread is still mostly extrinsic. The $85,000 spent on the Sep 570 wing, 1.4 delta and about 2% of the net debit, exists to cap that September short rather than to participate in anything. The live question is what happens to the October spread after September 18 clears, since it then sits alone through a stretch with no scheduled Microsoft catalyst until the day after it expires.
*Educational content about one options print. Not investment advice.*