Micron Options Traders Bet on a Bounce

Micron options traders are buying to open calls today, despite the stock's intraday struggles

Alex Eppstein
Apr 24, 2017 at 3:25 PM
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Chipmaker Micron Technology, Inc. (NASDAQ:MU) is sitting out the broad-market rally this afternoon, even after the company and Microsoft Corporation (NASDAQ:MSFT) announced a collaboration to improve security on the Internet of Things. At last check, the shares of MU were down 1.7% at $26.86. However, options traders are blazing a bullish path toward MU stock, which could get a lift from two levels of technical support.

Despite today's setback, MU has been tearing it up on a long-term basis, similar to this semiconductor ETF, with the shares up 155% year-over-year.  Micron stock is perched just above the 61.8% Fibonacci retracement of its late-2014 highs and 2016 lows, currently located at $26.29. Going forward, this level could act as a foothold, containing further losses and potentially springing the shares higher. Plus, MU stock's ascending 40-day moving average has largely contained the intraday losses, suggesting there could be a second level of technical support in place.

micron stock chart today

As alluded to, MU options traders are definitely counting on the stock reversing higher. Trade-Alert is calling attention to the weekly 5/5 28- and 28.50-strike calls, where new positions are being purchased. The buyers anticipate MU shares will topple the respective strikes by next Friday's close, when the series expires -- two days after the 2017 Micron Summit.

This is more of the same for Micron Technology, Inc. (NASDAQ:MU)  options traders. The stock, after all, sports a 50-day call/put volume ratio of 4.78 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Not only does this ratio indicate nearly five calls have been bought to open for every put, it also ranks in the bullishly skewed 92nd percentile of its annual range. What's more, Micron's Schaeffer's put/call open interest ratio (SOIR) of 0.32 sits below 100% of all readings from the past year, suggesting short-term open interest has never been so call-skewed.


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