Unusual Options Activity: Micron (MU)

Shares of chip giant Micron (MU) are still near their all-time highs, but sold off strongly on Thursday on reports of higher potential tax rates. One trader sees a clear rebound in the coming weeks.

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  • That’s based on the May $96 call options. With 26 days until expiration, over 12,321 contracts traded, a 108-fold jump in volume from the prior open interest of 112. The buyer of the calls paid about $0.62 to make the trade.

    With shares around $85, a 12 percent move higher would be needed for this trade to move in-the-money.

    Shares of Micron are up about 92 percent in the past year, and have flirted with prices as high as $97 before pulling back to the mid-$80 range, so this option trade is a bit on the aggressive side.

    Action to take: Given the shortage in the chipmaker space and the selloff in tech last week, a rebound move in the coming weeks looks likely. It’s a bit of a stretch to see this particular trade moving in-the-money, but traders who buy in and look for a quick 40-50 percent profit can likely grab it and get out before expiration.

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  • Longer-dated options, say out to September, could also fare well here. September $95 calls, going for about $4.95, are pricier, but stand a stronger chance of moving in-the-money in the months ahead.


    Disclosure: The author of this article owns shares in the stock mentioned here, but has no intention to make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.