Alphabet, Microsoft report after the bell. What Options Traders See

Options traders have taken contrasting views on Alphabet as the hyperscaler prepares to report post-closing earnings.

Current option prices imply a move of almost 6%, well close to its eight-quarter median move of 2.6%. Traders were decidedly bullish before the first. Just before noon, a trader purchased 2,271 contracts on the 350/365 call spread for about $4.4. The exchange is targeting an increase to $365, a 13% jump from its current price. The deal is a short-term bet, with the worst behind Alphabet, which saw its shares fall nearly 20% from its all-time highs reached in May.

Some merchants take a different approach to printing. Specifically, a separate trader bet on a 3×1 bearish put diagonal, raised $1.9 million by selling 9,000 of the 290 puts expiring on November 20 at $4.15 per contract while buying 3,000 of the January 15, 2027 options. 300-strike puts at $2.15 per contract for a total debit of $2.5 million dollars

This is a trade that seeks to take advantage of the high short-term volatility of Alphabet’s shorter-term puts. The goal is for these short-term puts to expire worthless, with the trader then buying the 300-strike puts, looking for a 9% decline through mid-January.

Mini market rally faces key test after the bell when tech giants Alphabet And Microsoft report. The technical setup and option expectations couldn’t be more different.

Microsoft is less than 1% below its closing high set earlier this month, while Alphabet is flirting with technical bear market territory, down 20% from its May closing high. Market makers expect Alphabet stock to move 5.8% after its report, compared to a move of less than 5% for Microsoft, according to Cboe LiveVol data.

For Microsoft, this is an implied change lower than its average variation over 2 years of 6%. For Alphabet, which has seen an average reaction of 2.7% over this period, that’s more than double – which probably makes sense given that shares fell 7% after last quarter’s report and were up 10% from the previous report.

The put/call ratio on both stocks has gradually built on the put side as the Nasdaq 100 Index has retreated, but the metric’s baseline for both shows more calls than puts over the past year, with the ratio consistently below 1, according to Barchart data. At Microsoft, the ratio is currently 0.59, compared to 0.43 in June.

At Alphabet, the ratio is 0.72, the highest since August, but Tuesday’s options flows cast a more positive light. Of the 435,000 options traded, 312,000 were calls, with nearly 102,000 calls likely initiated by buyers, compared to just 54,000 by sellers and the rest near the average price, according to Cboe data.

Some of the largest call purchases at Alphabet occurred during the 360 ​​strike for the January expiration, where it appeared a single trader purchased about $18.5 million worth of calls across eight trades of 2,850 contracts each, according to data from SpotGamma.