Microsoft Stock Still Looks Cheap - Shorting One-Month Puts Has a 2.0% Yield
Barchart says Microsoft (MSFT) appears undervalued, citing strong free cash flow and analysts’ price targets. MSFT closed at $460.52 on June 1 after rising post–fiscal Q3 results. Using analysts’ forecasts, Barchart estimates $98.5B FCF and a fair value of about $556.77/share (+20.9%). It also notes one-month OTM put yields around 2.0%.
Valuation/option-income thesis for MSFT based on FCF math and current one-month put premiums.
Article argues Microsoft is undervalued on FCF and proposes selling one-month OTM MSFT puts for ~2% yield.
Near-term price impact is likely limited; the piece is more about options positioning than a new fundamental catalyst.
Background
The piece references a prior valuation discussion (May 11) and uses analysts’ revenue forecasts to estimate OCF/FCF and derive a implied price target.
Why it matters
It frames MSFT as undervalued and suggests rolling short OTM puts to the next month based on reduced premiums.
Market relevance
Trading focus is on options income (short-dated put yield) rather than a new fundamental development.
Market effects
If the thesis gains traction, it reinforces a ‘mega-cap FCF support’ narrative for large-cap software/AI beneficiaries, but without new sector data.
Primarily US large-cap sentiment; no specific regional catalyst cited.
Global relevance is indirect—valuation/option strategy for a US mega-cap with worldwide exposure.
Alternative perspectives
FCF-based ‘cheapness’ can be offset by higher capex, margin compression, or multiple re-rating; put-selling can be punished by volatility spikes.
The article’s trade yield depends on option pricing and realized volatility; it doesn’t quantify tail-risk or event risk beyond the referenced earnings date.
Key entities
- companyMicrosoft
Subject of the valuation and one-month OTM put-selling trade thesis.
