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

Micron Technology, Inc. option traders eye a move to levels not seen in 12 years

by 4/21/2014 1:57 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).


Micron Technology, Inc. rallied more than 13% last week -- thanks in part to a halo lift from sector peer SanDisk Corporation (NASDAQ:SNDK) -- and the stock is showing no signs of stopping today. At last check, MU was up 4.8% to $25.07, lingering near levels not seen since mid-March. Not surprisingly, call volume is running at a 63% mark-up to the intraday average, with a number of short- and longer-term traders eyeing an additional move to levels not seen in roughly 12 years.

Specifically, two large multi-exchange sweeps traded right out of the gate at the weekly 4/25 26-strike call and the July 27 call. The sweep of 2,497 contracts that changed hands at the lower-strike call did so at an ask price of $0.14, implied volatility (IV) jumped 12.7 percentage points, and volume outstrips open interest, collectively hinting at buy-to-open activity. Based on the initial entry price, breakeven at this Friday's close -- when the options expire -- is $26.14 (strike plus premium paid), or an area not traversed by MU since May 2002. Risk, however, is limited to the initial cash outlay.

Elsewhere, the 6,000-contract sweep of July 27 calls crossed above the ask price for $1.14 apiece, pointing to buyer-driven activity. Plus, IV ticked higher at the time the transactions occurred, suggesting the initiation of new positions. Considering Micron hasn't seen the north side of $27 since April 2002, delta for these higher-strike calls is docked at 0.39, suggesting a 39% chance the option will be in the money at expiration on Friday, July 18.

Looking at the charts reveals that multi-year highs are not out of the question for Micron Technology, Inc. (NASDAQ:MU), though, which tagged an 11-year high of $25.68 as recently as February. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) reading of 86 implies MU has the tendency to make outsized moves, relative to what the options market has priced in.


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