Microsoft (MSFT) - Get Report shares surged $4.84, or 10%, Friday after the technology company reported better-than-expected earnings on Thursday.

Stock prices tend to move strongly in the wake of earnings surprises, often more strongly than justified. Microsoft appears to be a good example. The signs are on its chart.

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There is a lot here, and it makes a convincing case for a very short-term options trade. A volume spike was seen on the day of earnings, the biggest spike during the last six months. At the same time, momentum as measured by the relative strength index moved up to 81.98, far above the "overbought" index level of 70. This was the first time momentum showed an overbought reading since early May.

The stock's price further confirmed the overbought condition in two ways. First, price gapped above resistance by four points. Second, it formed a very bearish inverted hammer signal on Friday.

All of this points to a likely reversal in the immediate future. With this in mind, we focused on the weekly options expiring this Friday. The Oct. 30 weekly 53.4 put option closed Friday with an ask of 0.79. Adding $9 for trading fees, this option can be purchased for a total of about $88. The evidence is compelling for a correction to occur before Friday, so for such a low cost this could be an appealing swing trade based on the positive earnings surprise.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Besides blogging at TheStreet.com, Michael Thomsett also blogs at theCBOE Options Huband several other sites. He is author of 11 options books and has been trading options for 35 years.  Thomsett Publishing Website