Here's what options traders see before Alphabet, Microsoft report after the bell

(Reader note: Options Action will have live coverage of how to trade Alphabet and Microsoft heading into their earnings after the bell with Options Action contributors Mike Khouw and Brent Kochuba, so check back later today at 2:30 p.m. ET)

The market's mini rally faces a key test after the bell when tech giants Alphabet and Microsoft report. The technical set-up and options expectations could not be more different.

Microsoft is less than one percent below its closing record reached earlier this month, while Alphabet is flirting with technical bear-market territory, off 20% from its closing high in May. Market-makers are pricing a 5.8% move for Alphabet stock after its report, compared to under a 5% swing for Microsoft, Cboe LiveVol data show.

For Microsoft, it's a smaller implied move than its 2-year average swing of 6%. For Alphabet, which has averaged a 2.7% reaction over that time period, it's more than double – which arguably makes sense considering the shares dropped 7% after last quarter's report and rallied 10% the report prior.

The ratio of puts to calls on both stocks has been gradually building up on the put side as the Nasdaq 100 Index pulled back, but the metric's baseline for both shows more calls than puts the past year, with a ratio consistently under 1, according to Barchart data. In Microsoft, the ratio is currently 0.59, up from a low of 0.43 in June.

Microsoft, 1 year

In Alphabet, the ratio is 0.72, the highest since August, but Tuesday's options flows cast a more positive light. Of the 435,000 options traded, 312,00 were calls, with almost 102,000 call trades likely initiated by buyers, versus just 54,000 by sellers and the remaining near the mid-price, Cboe data show.

Some of the heaviest call-buying in Alphabet was at the 360-strike for January expiry, where it looked like a single trader bought around $18.5 million of calls across eight transactions of 2,850 contracts each, SpotGamma data show.

Alphabet, 1 year