Memory chip manufacturer Micron Technology (MU) is up 46% over the past year, outperforming the market. One trader sees further upside ahead for shares in the coming weeks.
That’s based on the November 29 $135 calls. With 21 days until expiration, 9,404 contracts traded compared to a prior open interest of 237, for a 40-fold rise in volume on the trade. The buyer of the calls paid $0.26 to make the bullish bet.
Micron shares last traded for about $112. The stock would need to rise by $23, or just over 20%, for the option to move in-the-money. Shares are about midway between their 52-week range of $71.71-$157.54, and are currently trending higher.
Revenues are up 93% over the past year, so even after its big rally, Micron shares are still reasonably valued at 12 times forward earnings.
Action to take: Given the uptrend in shares and the discount from its 52-week high, Micron still looks attractive here. Shares can easily rise by low double-digits through the end of the year. At current prices, Micron also pays a 0.4% dividend.
For traders, the November 29 $135 calls are aggressive, and likely won’t move in-the-money. But nimble traders can likely see low-to-mid double-digit returns. Less aggressive traders can go further out to take advantage of a longer-term rally.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
