Fundamentally, several reasons exist that justify a long-term investment in Microsoft (MSFT). Primarily, the company continues to post robust financial performances and impressive growth. It has also made significant inroads into core technological arenas such as cloud computing and artificial intelligence. Broadly, Microsoft’s suite of productivity software undergirds the networks of business and academia.

In other words, you can invest in MSFT stock and have a reasonable assumption that in five years’ time, your position will have increased in value.

Investing, particularly the long-term variety, often hinges on stories and themes: an enterprise’s growth potential, a macroeconomic trend, or a belief in a particular innovation (such as generative AI or the rise of clean energy solutions). Effectively, investors are buying into a vision — and for an entity like Microsoft, it's a credible one.

On the other hand, options trading focuses largely on probabilities. In this segment, market participants deal heavily in math: we’re talking implied volatility, delta, gamma and time decay, among other metrics. With options, the focus is less on why a company’s stock will move in a certain direction and more on the likelihood of its trajectory — and within a defined time period.

Options can be powerful tools but they’re also incredibly risky. There are few financial products that facilitate the massive payouts that the leverage of derivatives provides. At the same time, the trade must work out precisely and accurately.

With options strategies, being right might not be enough — you have to be right and right on time. This is why, when it comes to options specifically, it’s best to throw out the assumptions tied to the investment world.

Again, with options, it’s not about the why but about the how — how much, how fast and how likely.

MSFT Stock Issues a Hot Hand

From a trading perspective, one of the core characteristics of MSFT stock is its upward bias. In recent years, the chance that a long position in any given week will be profitable has hit 56.46%. That’s not an insignificant edge. Theoretically, over a lengthy period and assuming evenhanded money management, a bullish trader should win out more often than not.

In such circumstances, a debit-based approach is mathematically more appropriate. Under such a strategy, the trader pays a debit in anticipation of a particular outcome materializing. Since MSFT stock as a baseline features a 56.46% long-side probability, it makes sense to buy this probability rather than to sell the uncertainty (as would be the case under a credit-based approach).

Interestingly, from a market breadth perspective, MSFT stock printed a “6-4-U” sequence: six up weeks, along with four down weeks, with a net positive trajectory across the 10-week period. The significance of this sequence is that in 60.42% of cases, the following week’s price action results in upside, with a median return of 1.83%.

Essentially, MSFT stock could see a pop to $458.42 shortly if the implications of the 6-4-U work out as predicted. Assuming that the bulls maintain control over the market, it’s reasonable to assume that the optimists will target the $460 level over the next two weeks.

Statistically, what makes the 6-4-U sequence distinct is that it elevates MSFT’s inherent upward bias and kicks it up a half-step. Stated differently, market makers are pricing their options as if MSFT featured a weekly long-side success ratio of around 56%. However, the current market breadth data suggests that the ratio could be 60%.

Subsequently, MSFT options could be favorably mispriced, incentivizing a debit-based strategy.

Using Market Intel to Your Advantage

With the above market intelligence in mind, bullish speculators may consider the 452/460 bull call spread expiring June 6. This transaction involves buying the $452 call and simultaneously selling the $460 call, for a net debit paid of $389. Should MSFT stock rise through the short strike price at expiration, the maximum reward is $361, or a payout of nearly 93%.

What makes this trade potentially viable is the statistically positive response to the 6-4-U sequence. As Barchart Premier members can readily see in their bull call spread screeners, the probability of profit for the aforementioned call spread is only 36.4%. This lowly ratio reflects deep skepticism that the trade will materialize successfully for the debit-based speculator.

However, the market makers are not pricing in the probabilities associated with the 6-4-U market breadth sequence. Basically, the actual probability of profit arguably should be higher but it’s not. This gives an advantage to the bullish speculator, making MSFT stock a must-watch trade this week.