Shorting Microsoft Puts: High Income Yields Seen in Options Trade
Microsoft Corp. (MSFT) stock has experienced a trading range over the past two months, presenting opportunities for investors utilizing strategies like shorting out-of-the-money (OTM) put options. Currently, a one-month 4% OTM put option yields a 1.5% income yield, with MSFT trading at $475.35 in morning trading on Friday, January 9. This represents a decrease from $492.02 one month prior (December 9) and $496.82 on November 7. Investors are exploring potential income generation and establishing potential buy-in points as analysts continue to assess the company’s valuation.
Leveraging Put Options for Income
The strategy of shorting out-of-the-money put options in MSFT has gained traction, as evidenced by a recent Barchart article recommending it. Specifically, a month ago, on December 9, 2025, an article titled “How to Make a 1.1% Yield Shorting One-Month Microsoft Puts” suggested selling short the $475.00 put option expiring today. This option provided a yield of $5.63 per contract (multiplied by 100 shares, totaling $563 for an investment of $47,500). This equated to a one-month 1.185% income yield at the time. The current expiration date of February 6, 2026, presents a revised opportunity, with a $455.00 strike price put offering a midpoint premium of $7.60, delivering an immediate yield of 1.67% for an investment of $45,500.
Analyzing Price Targets and Analyst Sentiment
Analyst expectations regarding Microsoft’s future performance continue to drive upward price targets. In a November 4, 2025, Barchart article, MSFT stock was projected to reach as high as $682.55 per share over the next 12 months (NTM), based on strong FY 26 Q1 results and a 33% FCF margin. Since then, analysts have refined their revenue forecasts for the next two years, leading to an increase in price targets. Yahoo! Finance reports that 57 analysts have raised their price targets to $622.51, and Barchart’s mean price target stands at $630.07, compared to $632.77 two months ago. This sustained upward pressure indicates that analysts remain confident in Microsoft’s long-term prospects and valuation.
Current Opportunity: The $455 Put Option
The February 6, 2026, expiration date provides a specific opportunity. The $455.00 strike price put contract, with a $7.60 midpoint premium, generates an immediate yield of 1.67% for an investor who secures $45,500 in cash or buying power. The investor can execute an order to “Sell to Open” one put contract, receiving $760.00 directly. This means that for an investment of $45,500, they can effectively buy 100 shares at $455.00. Crucially, this arrangement doesn’t obligate the investor to purchase the shares unless the stock price falls below $455.00.
Historical Income and Potential Future Returns
The cumulative income generated from the two short-put plays over the past two months totals $13.23, representing an average investment of $46,500 and yielding a 2.845% return. This translates to an annualized return of 17% if this income-generating strategy can be replicated, highlighting the potential upside. Some investors are utilizing this income to acquire in-the-money (ITM) call options, further capitalizing on potential upward movement in the stock.
Concluding Remarks
The current market environment for Microsoft presents a compelling strategy for income-seeking investors. The opportunity to short out-of-the-money put options, combined with sustained analyst optimism and a historical income stream, creates a diversified approach to investment. By carefully monitoring the stock price and utilizing this income for further opportunities, investors can position themselves to benefit from both short-term income and potential long-term gains.
