A Microsoft Bull Just Closed $36 Million in Call Spreads That Do Not Expire Until 2027

One trader pocketed $36 million unwinding two bullish MSFT call spreads spanning 30,000 contracts that still had over a year until December 2027 expiry.

Azure hit a $100 billion run rate growing 43% year over year, yet Microsoft's guided $175 billion FY2027 capex bill dragged free cash flow down 6%.

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A CNBC segment on September 1, 2026 flagged something odd in Microsoft (NASDAQ:MSFT) options activity. A single participant unwound two long-dated bullish call spreads for a combined credit of roughly $36 million, and the contracts still had over a year left to run before their December 2027 expiry.

That single trade is probably not a signal on its own. One trader closing one position is one decision by one participant with unknown motives, and the range of plausible reasons runs from a fund rebalancing to a risk manager cutting exposure to a considered call that Microsoft will not clear the higher strikes by then.

What is worth doing is putting the flow next to what Microsoft actually reported in July and asking whether the stock's flat stretch this year is a pause or a repricing. The shares closed at $501.02 on Tuesday, up 8.02% over the past month but essentially flat over the past year at -0.3%.

CNBC's Oliver Renick described the trade this way: "Someone closed out two bullish call spreads a 595 to 705 spread worth 19 million and a 610 to 725 worth about 17 million. The trades spanned more than 30,000 call contracts, for a total credit of about 36 million."

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A call spread is a bet that a stock climbs above one strike but not much past a higher one, capping both risk and reward. Closing it for a credit means the holder took money off the table rather than waiting to see whether Microsoft clears the upper strike by expiry.

Renick added that "these were still very far out of the money contracts. But they also were for December 2027 expiry. So it's interesting not just because they were two of the top three biggest trades on the entire tape today, but because they still had plenty of time to work."

Broader sentiment does not look bearish. The full-chain put/call ratio sits at 0.55, and the December 2027 expiry itself shows a put/call ratio of just 0.02 with call volume of 34,372.

One trader's exit is a single data point, and the fundamentals are where the actual argument lives.

On the same segment, Jason Snipe made the bull case in one sentence: "Azure is now 100 billion business. Azure revenue was up 43% year over year. And copilot adoption is improving 30 million paid seats."

Those company-reported figures come from Microsoft's fiscal Q4 2026 report on July 29, 2026, in which revenue of $90.01 billion beat estimates by 2.71%, and non-GAAP EPS of $4.74 was the fifth consecutive beat.

Commercial remaining performance obligations reached $678 billion, up 84%. That backlog is the single most important number in the report because it turns AI enthusiasm into contracted revenue with a weighted-average duration of 2.3 years.

Copilot is the softer piece of the thesis. Thirty million paid seats is a real adoption signal, but the disclosure says nothing about revenue per seat or renewal rates, and the shift to a per-seat-plus-consumption model means the unit economics are still being written.

Satya Nadella framed the quarter around efficiency: "We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results."

Microsoft spent $115.948 billion on capital expenditures in fiscal 2026, up 79.62%, and management guided FY2027 capex to roughly $175 billion after an accounting shift.

Free cash flow fell 6.46% for the year even as operating cash flow grew 34.35%. That gap is the whole story, and it is why bulls with long-dated spreads might reasonably book profits.

Amy Hood argues the spend is flexible because CPUs and GPUs are short-lived assets, and "if the demand environment changes, you just slow down what is, in fact, the largest component."

The counter is that Microsoft's return on equity of 34.04% and operating margin of 46.78% reflect an earlier era when the business was capital-light. Gross margin fell to 67% in Q4 on Azure mix and AI infrastructure investment.

The flat one-year stock price, alongside 17.79% full-year revenue growth, suggests the market is already discounting some margin erosion.

Microsoft trades at a P/E of 28x, cheaper than it was a year ago and supported by a backlog most software companies would envy.

Against Amazon Web Services and Google Cloud, Azure is growing faster off a larger base, and the OpenAI relationship, now a 27% stake valued at approximately $135 billion with a $250 billion incremental Azure commitment, is a competitive moat neither has matched.

Oracle (NYSE:ORCL) has emerged as a real threat in raw AI capacity contracts, but it lacks the enterprise software distribution that lets Microsoft attach Copilot at scale.

The one closed trade on Tuesday does not change the thesis. It reflects one holder's judgment that the upside case, Microsoft trading between $595 and $725 in late 2027, is worth converting into cash today.

The capex bill is real, and the near-term margin pressure is real, but the backlog, the Azure trajectory, and the pricing power in Copilot upgrades leave room for the stock to move higher over the next eighteen months. A $175 billion capex year also has to be powered and cooled by somebody, which is why we pulled together seven suppliers behind the data-center buildout in a free report on the AI infrastructure trade.

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