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

Micron Technology, Inc. option bulls predict a strong summer ahead

by 4/29/2014 1:16 PM
Stocks quoted in this article:

The 20 stocks listed below have seen the highest total options volume over the course of the last 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, and highlighted names are new to the list since the last study was run. One stock seeing notable activity on the call and put side this afternoon is Micron Technology, Inc. (NYSE:MU).


Up roughly 170% in the last 12 months to its present perch of $25.19, Micron Technology has remained popular among call buyers in recent weeks. Specifically, during the last 50 trading days on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than four MU calls have been purchased to open for each put. The resulting 50-day call/put volume ratio, of 4.12 however, is notably average, in the 49th annual percentile. In other words, this degree of long call demand (relative to puts) is par for the course.

Call buyers have the upper hand again today, with roughly 46,000 calls on the tape compared to around 22,000 puts. Nearly one-fourth of this call volume traded at the July 23 call, which is today's most active strike by a hefty margin. Volume exceeds open interest, implied volatility is slightly higher, and nearly all of the volume has traded at the ask price, collectively pointing to new long call positions.

These calls are currently in the money by $2.19 (stock price minus strike price), and delta on the position has ticked higher today to 70% from 66% at last night's close. In other words, the options market currently assigns a 70% chance that MU will still be trading north of $23 at July options expiration. Breakeven at expiration, however, is $26.08, or the strike price plus the volume-weighted average price of $3.08.

The breakeven level resides south of the stock's recent high of $26.62,tagged last Thursday. This represented the highest perch for Micron Technology, Inc. (NYSE:MU) since May 2002. Today's in-the-money call buyers are wagering on continued upside in the stock through the next few months, but if MU changes course and drops back below $23, the most on the line is 100% of the premium paid.

Also notable in the MU pits today are the January 2015 28-strike call and put. Shortly after 12:30 p.m. ET, symmetrical blocks of 5,000 contracts were evidently sold to open at these strikes, potentially representing a longer-term short straddle.


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