Unusual Options Activity: Micron Technology (MU)

Shares of semiconductor firm Micron Technology (MU) have been trending higher in recent weeks, reversing a longer-term declining trend this year. One trader sees a continued move higher this month.

  • Special: This Company’s Share Price has Increased 1650% Since 2016
  • That’s based on the November 26 $80 calls. Expiring in 16 days, 50,100 contracts traded hands, a 219-fold jump in volume from the prior open interest of 229. The buyer of the calls paid $0.71 to make the trade.

    With shares of Micron around $74.50, shares would need to rally another 7.3 percent in just over two weeks for the option to move in-the-money.

    Micron is up 32 percent in the past year, about in line with the S&P 500. Left somewhat behind compared to other chip names right now, shares trade at less than 8 times forward earnings. Earnings have jumped over 175 percent in the past year and revenue is up nearly 37 percent.

    Action to take: Shares are inexpensive here, and will likely continue to trend higher, possibly back to the 52-week high over $96. Today’s shareholders do get paid a $0.10 dividend, which works out to a 0.1 percent yield. That’s note huge, but it could grow over time.

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  • Based on the recent rally underway in shares, the November 26 calls stand a decent chance of moving in-the-money in the two weeks before they expire. However, there’s not much time left, and traders may want to use a longer-dated strike price to take advantage of a year-end rally.

     

    Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.