Microsoft into earnings: where the expected move meets the moving averages

The chain prices the reaction before the result is known. Read that price, watch where the chart frames it, and the choice of structure follows from the view – not from a forecast of the number.

An earnings date is a rare thing in markets: a known moment when a stock is almost certain to move, with the size of that move already quoted. The options chain carries the crowd’s estimate before a single figure is released. For a trader, the work is less about forecasting the result than about deciding whether that quoted move looks too high, too low, or about right – and building a position around the answer.

Microsoft (MSFT) supplies the live example. It reports after the US market close on 29 July 2026 (Source: Microsoft, as of 8 July 2026) and last traded near $397.75 (Source: Saxo, as of 21 July 2026 close), holding just under its 50-day moving average near $401 and just above its rising 200-week average near $390, with heavier resistance overhead toward the 200-day near $438. As is typical into a report, its near-dated implied volatility is elevated. Whether that risk/reward justifies a position – and, if so, how to structure it with defined risk rather than an outright bet into a binary catalyst – is the question the rest of this piece works through.

Microsoft heads into earnings pinned between its 50-day (about $401) and its rising 200-week average (about $390), with the 200-day (about $438) as overhead resistance. Source: SaxoTrader, as of 21 July 2026

Past performance is not indicative of future results. This chart is illustrative and for educational purposes only; it is not predictive.

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What the options chain is already pricing

The market’s estimate of the move is not hidden; it can be read straight off the chain. Add the at-the-money call premium and the at-the-money put premium for the expiry that captures the event, and that combined straddle price is a rough proxy for how much movement buyers are paying up for.

The expiry that matters here is the 31 July weekly: Microsoft reports on the evening of 29 July, two sessions before it expires, so that contract carries the full event. At the $400 strike the call was priced near $15.80 and the put near $17.55, a straddle of about $33.40 (Source: Saxo option chain, indicative pre-open as of 22 July 2026). Against roughly $397.75 that works out to about an 8% expected move, an implied range of roughly $364 to $431 – the yardstick every structure below is measured against.

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The premium that evaporates after the print

What makes earnings options expensive is implied volatility, not the stock itself. In the days before the report the nearest expiry gets bid up; the moment the result is public, that implied volatility drains away regardless of which way the stock went – the “IV crush.” It is why a trader can call the direction correctly and still lose money on a bought option, when the collapse in volatility outweighs the move in price.

Microsoft’s curve is steep right now: at-the-money IV near 65% for the 31 July weekly, dropping to about 45% for 21 August and settling near 37% further out (Source: Saxo, as of 22 July 2026). In our view a term structure that front-loaded appears to argue against buying naked front-week premium and may give net-selling structures a tailwind – though a large enough move can still overwhelm any crush, which is why each example below is defined-risk.

The at-the-money IV forward curve – the 31 July expiry near 65%, falling toward roughly 37% further out. The spike is the earnings event; the collapse after it is the crush. Source: SaxoTrader, as of 22 July 2026

Past performance is not indicative of future results. This chart is illustrative and for educational purposes only; it is not predictive.

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Important note: The strategies and examples provided in this article are purely for educational purposes. They are intended to assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor or trader must conduct their own due diligence and take into account their unique financial situation, risk tolerance, and investment objectives before making any decisions. Remember, investing in the stock market carries risk, and it’s crucial to make informed decisions.

A bullish tilt, financed by the earnings week

For a bullish view into earnings that is reluctant to pay peak volatility for a call, a long call diagonal is an example that can teach us a lot: a longer-dated call for the directional exposure, financed in part by a shorter-dated, higher-strike short call that sells the most inflated premium.

The following examples are hypothetical and for educational use only; they are not advice or trade recommendations. On Microsoft, with the top of the implied move and the declining 200-day near $438 as a near-term ceiling:

Example structure (illustrative only – not a trade recommendation)

• Buy 1 21 August 2026 $400 call (about $20.35)
• Sell 1 31 July 2026 $420 call (about $8.57)
• Net debit: approximately $11.78 = $20.35 paid for the August 400 call, less $8.57 taken in on the July 420 call ($1,178 per spread)
• Maximum risk (model-dependent): approximately the net debit – about $1,178 – if MSFT falls sharply (hypothetical, for education only)
• Maximum profit (model-dependent): approximately $1,800 near $420 at the 31 July expiry (hypothetical, for education only)
• Break-even at the 31 July expiry (model-dependent): approximately $387, about 2.7% below spot

Risk: the maximum loss is approximately the net debit paid – about $1,178 – and a broad fall in implied volatility can hurt the long August leg, while a gap far above $420 caps the near-term gain; profit and break-even are model-dependent. The short call carries early-assignment risk. Costs and charges apply to each leg; see Saxo pricing for full details.

The August call is the engine: it carries the directional exposure and lives well past the report. The short 31 July $420 call sits at the top of the implied move and does the financing – it sells the most inflated premium on the board, implied volatility near 65% with about a week of life left, covering roughly 42% of the August call’s cost while the August leg is itself priced from a much lower volatility near 45%. If Microsoft does not push straight through $420, that short leg is built to decay quickly as post-earnings volatility falls; on current pricing, even with the stock unchanged at $397.75 the position models a gain of roughly $500 at the 31 July expiry as the short call bleeds out.

Strategy insight – short the event week, long the month after. The position is net long volatility through the August call, so it may benefit as the front-week premium crushes while the August leg holds value; the risk is that a broad, lasting drop in implied volatility offsets that decay, and a gap far above $420 caps the near-term gain. Because those outcomes depend on the residual August call’s price, treat the maximum profit and break-even as estimates, not fixed levels – the modelled downside break-even near $387 also happens to sit close to the 200-week average around $390.

Long call diagonal, modelled at the 31 July expiry with the August leg at 45% IV. Illustrative and educational only – not a trade recommendation, and not predictive. Source: Saxo

Past performance is not indicative of future results; figures are illustrative and not predictive.

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Fading the move, between the moving averages

For a view that the market is over-pricing the move, a short iron condor is a structure that shows the idea clearly: it collects premium and may reach its maximum profit if the stock stays inside a chosen range, in effect selling the implied move in the hope the realised move is smaller.

On Microsoft, the range is drawn in advance by the expected move and by the technical levels that frame it – the 200-week average near $390 below, the 200-day near $438 above. The structure below is hypothetical, for education only.

Example structure (illustrative only – not a trade recommendation)

• Sell 1 31 July 2026 $365 put (about $4.50), buy 1 31 July 2026 $355 put (about $2.68)
• Sell 1 31 July 2026 $435 call (about $5.15), buy 1 31 July 2026 $445 call (about $3.78)
• Net credit: approximately $3.19 = $1.82 from the put side ($4.50 taken in, less $2.68 paid) plus $1.37 from the call side ($5.15 taken in, less $3.78 paid) ($319 per condor)
• Maximum risk: approximately $681 (the $10 wing width minus the net credit) (hypothetical, for education only)
• Maximum profit: approximately $319, if MSFT finishes between $365 and $435 (hypothetical, for education only)
• Break-evens at expiry: approximately $361.81 and $438.19

Risk: the maximum loss – about $681 – occurs if MSFT settles beyond either long strike, while the maximum profit of about $319 is reached only if the stock holds between the short strikes; the short legs carry early-assignment risk. Costs and charges apply to each leg; see Saxo pricing for full details.

The short strikes mark the range the trader is betting the stock holds; the long strikes behind them cap the loss if it does not. What makes the placement neat here is the chart: the upper break-even near $438 sits almost exactly on the declining 200-day average, and the lower break-even near $362 is below the 200-week support near $390, so the trade asks Microsoft to stay inside a band the moving averages already frame. It may benefit from the post-earnings crush, which speeds the decay of both spreads, but the risk is capped: a move beyond either break-even turns the credit into a loss, up to the $681 maximum.

Strategy insight – the range is already drawn for you. An iron condor into earnings is a short-volatility position: it may profit if the realised move is smaller than the implied one, and loses if it is larger. Anchoring the shorts just outside the implied move – and near the moving averages that can act as support and resistance – ties the range to where the market and the chart are positioned.

Short iron condor with shorts just outside the implied move, at the $365 and $435 strikes. Illustrative and educational only – not a trade recommendation, and not predictive. Source: Saxo

Past performance is not indicative of future results; figures are illustrative and not predictive.

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Leaning lower into the 200-day wall

For a view that the post-earnings reaction fades at resistance, a bear call spread is a good structure to learn from: sell a call above the market and buy a higher one for protection, collecting a credit that is kept in full if the stock stays below the short strike.

On Microsoft, the wall of overhead resistance – the 200-day near $438 and the 50-week near $447 – sits just above the top of the implied move. The example below is hypothetical, for education only.

Example structure (illustrative only – not a trade recommendation)

• Sell 1 31 July 2026 $430 call (about $6.12)
• Buy 1 31 July 2026 $440 call (about $4.22)
• Net credit: approximately $1.90 = $6.12 taken in on the short $430 call, less $4.22 paid for the long $440 call ($190 per spread)
• Maximum risk: approximately $810 (the $10 width minus the net credit) (hypothetical, for education only)
• Maximum profit: approximately $190, if MSFT finishes below $430 (hypothetical, for education only)
• Break-even at expiry: approximately $431.90, about 8.6% above spot

Risk: the maximum loss – about $810 – occurs if MSFT settles above the long $440 strike, while the credit of about $190 is the most the trade can make and is kept only if MSFT stays below $430; the short call carries early-assignment risk. Costs and charges apply to each leg; see Saxo pricing for full details.

The short $430 call sits at the top of the implied move and just below the 200-day wall; the long $440 call caps the loss if Microsoft breaks above that resistance. The trade keeps its full credit if the stock stays below $430 – it does not need a fall, only the absence of a strong rally, which is what makes it a bearish-to-neutral lean rather than an outright short. It also harvests the post-earnings crush on the short call.

Strategy insight – selling a level, not forecasting a crash. A bear call spread can profit from time and a stalling rally as much as from a decline, and the whole credit is earned as long as price holds below the short strike; the trade-off is the shape of the payoff – a small, defined credit against a larger, still-capped loss if the rally runs through both strikes. Selling further from the money raises the probability of keeping the credit but shrinks it; selling closer collects more but leans harder on the stock actually stalling or falling.

Bear call spread with the short call at $430, just below the 200-day. Illustrative and educational only – not a trade recommendation, and not predictive. Source: Saxo

Past performance is not indicative of future results; figures are illustrative and not predictive.

A note on the expiry: the expected move is taken from the 31 July weekly because that expiry captures the print most directly, but the diagonal’s long leg runs to 21 August to give the bullish thesis room; that leg should be priced from the August chain, not by assuming the front-week’s roughly 8% move applies to it unchanged.

Before placing an earnings trade, check:

• Bid/ask spreads – wide spreads can eliminate the theoretical edge at entry, especially in weekly wings
• Volume and open interest at the selected strikes
• Whether earnings are before the open or after the close – it determines which expiry captures the move
• Implied volatility relative to how much the stock typically moves on earnings
• An exit plan defined before entry, particularly for multi-leg structures
• Assignment risk on any short leg that moves in the money (see note below)

Assignment risk note: Because MSFT options are American-style, any short leg – the diagonal’s short call, the condor’s short strikes, the bear call’s short call – can be assigned before expiry if it moves in the money, particularly near expiration. Traders should monitor short options and understand the platform’s assignment process before entering.

See Saxo pricing for costs and applicable charges: https://www.home.saxo/rates-and-conditions/pricing-overview

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What transfers to the next earnings print

Strip out the ticker and the same three-step shape remains: read what the chain is charging for the move, expect the volatility to drain out once the result lands, and pick a structure that matches a view while capping the downside. Microsoft only supplied the live numbers and the levels. None of the three examples rested on knowing the result in advance – each started from the price of the reaction and asked a different question of it: cheap enough to own the upside, rich enough to sell, or likely to stall where the chart says it should.

That shift – from guessing the announcement to pricing the response – is what separates an earnings options trade from a coin toss. Whether the realised move lands inside or outside the implied range cannot be known beforehand, which is why structures with the loss fixed at entry can be the more disciplined way in. Options carry a high risk of rapid loss and are not suitable for every investor. The chain shows what the crowd will pay for the reaction; the decision left to the trader is whether that price is worth taking, and from which side.

The author does not hold positions in any of the instruments mentioned in this article.

Sources: Microsoft Q4 FY2026 earnings date – Microsoft (news.microsoft.com); price, option premiums, implied volatility and moving averages – Saxo platform, as of 21–22 July 2026.

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