The Build Conference is about to kick off: Pre-market strategy analysis

Last week, when $Microsoft(MSFT.US) was at $427, I noticed Microsoft's options. Today in pre-market, the stock price has already surged to $464 in one go. The Build conference is tomorrow, but right now, it's actually time to hold off. Chasing the same logic at different price points is completely different.

My previous logic for looking at Microsoft was sound: institutions dumped $9.2 million on $440 Calls in one day, over ten thousand contracts. Build is also a known catalyst. At that time, following with a $430/$450 narrowed spread, close to at-the-money, low cost, covering Build, was reasonable.

But now the pre-market price is already at $464. For the same strike price, entering last week was about steadily building a position following the uptrend, but when the price changes, the play changes too.

In recent trading sessions, the stock price has surged significantly. A large portion of the optimistic expectations for Build have already been priced in. Moreover, IV is already in the mid-to-upper range of IVR 61, and Build is happening tomorrow. IV will likely push higher before the event. Once the announcements come out tomorrow, there's a high probability of an IV crush—a classic case of "buy the rumor, sell the news." The clearer the good news and the more it's already been priced in advance, the easier it is to give back gains on the day of realization.

For friends who got on board last week or earlier, the floating profits are quite substantial now. I myself will take profits on half to two-thirds before Build, leaving a small position to see what happens tomorrow—to take some of the "right direction bet" money off the table first. The current gains have already met my expectations. The risk-reward ratio the day before the event isn't worth holding a heavy position for.

If you didn't get on board before, I don't recommend chasing before the event concludes. If you really want to participate in Build, the spread needs to be adjusted upward with the current price, for example, buying a $450 Call and selling a $475 Call, expiring 6/26. But honestly, at this point, IV is expensive and upside is overextended. I personally wouldn't chase in the day before the event. At this price level, you could wait for Build to conclude tomorrow. If there really is an IV crush and the stock price pulls back to the $445–450 range, then consider entering. That's much more comfortable than chasing at a high price now. A stop-loss could be placed at $445. If it breaks below, it means Build didn't hold and there's an early pullback.

Last week, some friends talked about the impact of AI agents on Office. But for now, I'm still bullish on Microsoft's direction—I believe the narrative of Build launching its own code model and breaking away from OpenAI. Going forward, remain bullish, use spreads, and respect risk-reward and IV. Get in when it's time to get in, and hold back when it's time to hold back—for now, I'm taking some profits off and waiting for a pullback. Let's see what Build brings tomorrow.