$Microsoft(MSFT.US) In 2026, Microsoft continued its decline from 2025. With the rise of the Claude model launched by Anthropic this year, Microsoft's stock price fell more sharply this year, dropping from the beginning of the year to early April, hitting a two-year low of around 355.
The top-left chart shows the long-term volatility trend. It can be observed that at the end of last year, the decline in stock price also drove down volatility, with a slow decline accompanied by a decrease in trading activity.
However, after the earnings report at the beginning of the year, a new baseline was established. Subsequently, even as the stock price fell to early April, volatility did not decrease.
Although the decline in $Microsoft(MSFT.US) started last November, for the same downward wave, market participants had two different trading sentiments.
Entering 2026, the continuous decline has instead kept implied volatility at a higher baseline (~25%). I believe that if the stock price falls below $425, it might trigger some holders to consider buying insurance for a deeper decline (buy put), while others might think it's time to enter the market and buy call options because Microsoft is already oversold.
Both sentiments lead to a continued decline in the stock price but push implied volatility higher.
Until early April, the capital judging that $Microsoft(MSFT.US) was oversold gradually became mainstream. Therefore, you can see in the top-right chart that the short-term Put/Call volatility spread followed a gentle downward trend, even briefly falling below the zero line recently.
The rebound in $Microsoft(MSFT.US) in early April lacked sustained momentum. After the earnings report, the stock price stagnated and fluctuated at this level, while the overall implied volatility fell back to the pre-earnings baseline.
Interestingly, although overall volatility decreased, the buying pressure for call options still outweighed that for put options. Therefore, the Put/Call volatility spread did not return to the past pattern dominated by put options.
The bottom-left chart shows the daily change in $Microsoft(MSFT.US) option positions during last Friday's trading session. At this time, under conditions of low volatility, we can observe that call options were actively opened across all options, with a wave of capital very confidently bullish. In contrast, the opening of put options can only be described as sporadic.
The bottom-right chart shows the daily change in $Microsoft(MSFT.US) call option positions since March. Since May 18th, this unusual bullish buying sentiment has been continuously building call positions daily, with strike prices ranging from $420 to $440, until May 22nd when even more aggressive position opening occurred. Furthermore, judging from the volatility spread trend in the top-right chart, these long positions were dominated by buying, not by long-term holders selling covered calls.