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Why MSFT Is an Excellent Covered Call Candidate Right Now Strong · 90/100
Microsoft Corporation (Technology) · $464.72 ·
Analysis generated Jul 31, 2026 ·
Data as of market close Jul 31
Quick Take
MSFT is trading at $464.72 with RSI at 74 (overbought territory). Options IV is at 28% — 50% below its 30-day average of 56%. While the stock is extended, IV is below average which means premiums aren't as rich. The trade still works but yields less income than usual.
Technical Signals
RSI (14)
74
IV Today
27.8%
IV vs 30d Avg
-50%
MACD
bullish
ADX
16
MFI
71
The Setup
MSFT Covered Call
LONG STOCK
100 shares @ $464.72
SHORT CALL
$500 Sep '26 · $7.7/sh
Net Cost
$45,702
Max Profit
+$4,298
Break-even
$457.02
Projected P&L at Target
+$4,298
(9.4%)
P&L at Expiry
P&L Scenarios
What happens at different MSFT prices by expiry:
| MSFT Price | Today | Aug 17 | Sep 2 | Sep 18 (exp) |
|---|---|---|---|---|
| $372 (-20%) | -$8,532 | -$8,525 | -$8,524 | -$8,524 |
| $395 (-15%) | -$6,240 | -$6,209 | -$6,201 | -$6,201 |
| $418 (-10%) | -$4,020 | -$3,925 | -$3,880 | -$3,877 |
| $441 (-5%) | -$1,957 | -$1,749 | -$1,590 | -$1,554 |
| $455 (-2%) | -$838 | -$549 | -$274 | -$159 |
| $465 (0%) ← now | -$155 | +$186 | +$550 | +$770 |
| $474 (+2%) | +$470 | +$859 | +$1,308 | +$1,699 |
| $488 (+5%) | +$1,296 | +$1,736 | +$2,286 | +$3,094 |
| $500 (+8%) ← target | +$1,898 | +$2,359 | +$2,946 | +$4,298 |
| $511 (+10%) | +$2,365 | +$2,826 | +$3,403 | +$4,298 |
| $534 (+15%) | +$3,083 | +$3,490 | +$3,944 | +$4,298 |
| $558 (+20%) | +$3,522 | +$3,841 | +$4,137 | +$4,298 |
Why This Strategy, Why Now
- RSI at 74 — extended, ideal for selling calls
- IV -50% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 16 — range-bound, perfect for selling calls
- No squeeze — no imminent breakout
- MFI at 71 — money flow confirms overbought
Key Risks
MSFT has bullish momentum (MACD). If a positive catalyst emerges (earnings beat, product launch), the stock could gap past your strike. Consider rolling the call up if MSFT approaches the strike before expiry.