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Micron Technology, Inc. (NASDAQ:MU) calls and puts are both trading at a faster-than-usual clip as we approach midday. By the numbers, roughly 44,000 calls are on the tape, compared to 23,000 puts. Against this backdrop, the stock's 30-day at-the-money implied volatility has edged 1.9% higher to 35%, suggesting strong demand for short-term MU options.
Seeing the most action is the semiconductor concern's weekly 7/11 33.50-strike call, where close to 11,000 contracts are on the tape -- most of which are being bought to open at a volume-weighted average price (VWAP) of $0.17. As such, the speculators are looking for MU shares to rally north of $33.67 (strike plus VWAP) by Friday's closing bell, when the weekly options expire, with theoretically unlimited gains north of breakeven. Conversely, the most the buyers have risked is the initial premium paid, should the equity finish the week below the strike price.
At the same time, with 11% of Micron Technology, Inc.'s (NASDAQ:MU) float sold short -- representing a week's worth of pent-up buying demand, at the stock's average daily trading volume -- it's possible a portion of today's call buyers are short sellers looking for a near-term upside hedge. However, if the equity can extend its longer-term gains -- MU is up over 130% year-over-year at $32.32 -- the shorts could get squeezed, providing the shares with another potential lift.