Microsoft Corp. (MSFT) stock has presented a compelling opportunity for investors over the past two months, primarily through shorting out-of-the-money (OTM) put options. As of January 9, 2026, the stock was trading at $475.35, representing a decrease from $492.02 one month prior and $496.82 from November 7th. This strategy has yielded substantial income for those willing to capitalize on potential downward movement in the stock price. This article details a specific, successful trade and explores the broader implications for investors considering this approach.
Microsoft Put Options: A Recent Success
A key element of this strategy involves selling short one-month put options on Microsoft stock. A month ago, on December 9th, the author recommended a Barchart article titled “How to Make a 1.185% Yield Shorting One-Month Microsoft Puts.” This involved selling the $475.00 put option expiring on that date. At that time, Microsoft’s stock was trading at $491.00, resulting in a strike price exceeding $491.00 by over 3% – a position that ultimately generated a significant income stream. Investors purchased $47,500 in contracts, receiving $563 for each, representing a 1.185% yield. This approach highlighted the potential for income generation even in a relatively stable market.
Analyzing the Current Opportunity
As of today, January 9th, 2026, the February 6, 2026, expiry period presents a renewed opportunity. The $455.00 strike price put option is currently offering a midpoint premium of $7.60, translating to a 1.67% yield on an investment of $45,500 to acquire 100 shares at $455.00. This reflects a 4% discount to the current stock price ($475.35), demonstrating the value proposition of this play. An investor could initiate a “Sell to Open” order for one put contract, receiving an immediate payment of $760.00, or 1.67% of the collateral investment.
Quantifying the Returns
The cumulative income generated from these two short-put plays over the past two months totals $13.23, representing a return of 2.845% on an average investment of $46,500. This translates to an annualized return of approximately 17% if this strategy can be replicated. This highlights the considerable potential for income generation alongside a planned lower entry point for a potential long position. Furthermore, a skilled investor could leverage this income to purchase in-the-money (ITM) call options, increasing their upside exposure while maintaining a controlled level of risk.
Analyst Perspectives and Future Outlook
Analysts continue to view Microsoft stock as undervalued. The consensus price targets reflect this sentiment. Yahoo! Finance reports that 57 analysts have raised their price targets to $622.51, and Barchart’s mean price target is $630.07, compared to $632.77 two months prior. These targets are based on factors such as strong financial results (33% FCF margins in FY 26 Q1) and anticipated revenue growth. The potential for further price increases, combined with the income generated from the put options, represents a strong strategic advantage for investors.
Disclaimer
Mark R. Hake, CFA, did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com.
