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Micron Technology, Inc. (NASDAQ:MU) call players have been active this week, which isn't too surprising, given the stock's roughly 154% year-over-year advance. In today's session, conservative option bulls are buying to open the equity's in-the-money (ITM) September 28 call, as they gamble on extended gains for the semiconductor stock over the next two months.
Today's traders are paying a volume-weighted average price (VWAP) of $5.86 for the calls, making breakeven at the close on Friday, Sept. 19 -- when back-month options expire -- $33.86 (strike plus VWAP). Gains will accumulate north of here, while losses are capped at 100% of the premium paid, should MU settle south of the strike at expiration. At last check, the security was sitting just south of breakeven at $33.67.
As noted, these call buyers are playing it safe by buying to open such a deep ITM strike. In fact, delta on the call is docked at a lofty 0.89, suggesting an 89% chance the option will expire in the money. What this also means is that for every point Micron Technology, Inc. (NASDAQ:MU) adds through September options expiration, the value of this call will increase 0.89 point. Conversely, for every point the equity loses over the next eight weeks, the call's value will decrease by 0.89 point.