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Most Active Options Update: Micron Technology, Inc. (MU)

Micron Technology, Inc. option traders see technical troubles ahead

by 1/27/2014 2:51 PM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Micron Technology, Inc. (NASDAQ:MU).


Put volume has accelerated on Micron Technology, Inc. in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Since Dec. 27, the stock's 10-day call/put volume ratio on these exchanges has risen to 0.38 from 0.17, and the current ratio ranks in the 82nd percentile of its annual range. In other words, calls have been bought to open at a faster-than-usual clip.

In today's session, one strike receiving notable attention is MU's April 22 put. Nearly all of the 5,522 contracts traded -- including a block of 3,546 -- went off at or above the ask price, and implied volatility has ticked higher, suggesting the initiation of new bearish positions. From its current perch at $23.07, MU would need to drop roughly 4.6% over the next two-plus months in order for these puts to breach the strike price. Per the put's delta of negative 0.37, or 37%, there's a less than 2-in-5 probability the option will be in the money at expiration. Given the stock's withstanding technical tenacity, a portion of this activity could be indicative of shareholders hedging against a pullback.

Looking at the charts, Micron Technology, Inc. hasn't traded south of $22 since receiving an earnings-induced boost in early January. In fact, the stock has tacked on a respectable 6.5% in 2014, compared to a 3.2% loss for the broader S&P 500 Index (SPX). However, this upward momentum is just more of the same for an equity that's nearly tripled in value year-over-year. If MU continues to climb up the charts, a capitulation from option bears could help fuel the stock's fire.


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