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

Micron Technology, Inc. is targeted for a bull put spread

by 2/6/2014 1:08 PM
Stocks quoted in this article:

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).

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Micron Technology, Inc. jumped to its highest mark since July 2002 this morning -- following news that the semiconductor concern priced its senior note offering -- but was last seen lingering 4.3% higher at $24.31. In spite of this positive price action, put volume has more than doubled the typical intraday pace. Looking deeper into the data, though, reveals that not all of today's action is of the traditional bearish variety.

Shortly after the open, two symmetrical blocks of 6,000 contracts simultaneously traded at MU's April 19 and 21 puts. The former changed hands at the ask price of $0.37 apiece, while the latter went off at the bid for $0.76 each. Implied volatility rose at each transaction, suggesting the initiation of new positions. In other words, it appears this speculator bet on MU to maintain its footing on the charts by initiating a bull put spread.

Ideally, Micron will remain north of $21 through the close on Thursday, April 17, allowing both puts to expire worthless, and the speculator to pocket the net credit of $0.39 as her full potential reward. Breakeven for the play is $20.61, or the sold put minus the net credit. Risk, meanwhile, is limited to $1.61, which is the difference between the two strikes, less the net credit.

This conservatively bullish view toward MU isn't surprising, considering the stock has more than tripled on a year-over-year basis. What's more, Micron Technology, Inc. (NASDAQ:MU) hasn't traded south of the aforementioned breakeven mark since Nov. 27. On the fundamental front, the company will host its winter analyst conference tomorrow.


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