This Chip Stock Could Surge Into February

MU calls have been much more popular than puts

by Patrick Martin

Published on Jan 11, 2018 at 3:03 PM

Chip makers have been in focus to start the new year, after Intel's (INTC) reported Spectre security flaws. Fellow chipmaker Micron Technology, Inc. (NASDAQ:MU) has also struggled lately, on track to shed 8.4% this week. However, this pullback puts MU stock within one standard deviation of its 80-day moving average, a trendline with historically bullish implications.

According to Schaeffer's Senior Quantitative Analyst Rocky White, following the last three pullbacks to the 80-day moving average in the past three years, the semiconductor name was up an average 9.47% one month later, and higher two out of the three times. Micron was last seen down 0.7% to trade at $43.06.

Pullbacks MU

In the options pits, the attitude remains overwhelmingly bullish. That is, the equity has a 10-day call/put volume ratio of 4.58 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meaning call buying has outnumbered put buying by a more than four-to-one ratio.

Digging deeper, the weekly 2/23 49-strike call saw one of the largest increases in open interest during this time. According to the major options exchanges, the predominant activity at this strike was of the buy-to-open kind, indicating options traders are banking on Micron stock to resume its quest for fresh highs in the coming months. 

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