Upgrade Vaults Micron Stock Past $50

MU also saw its price target lifted at Wells Fargo

Patrick Martin
Sep 11, 2019 at 9:56 AM
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The shares of Micron Technology, Inc. (NASDAQ:MU) are up 3.1% to trade at $50.93 this morning, and earlier nabbed a fresh annual high of $50.94, after Longbow Research raised its rating on the chip stock to "buy." The analyst in coverage credited the company for improving its operating margins, while also noting that pricing fundamentals for DRAM and NAND chips will recover. 

Wells Fargo joined in, too, upping its price target to $60 from $50, territory not seen since June 2018. Micron stock is up almost 32% this quarter, enjoying sector tailwinds from positive China trade rhetoric. Plus, MU now seems to have found a foothold above the $48 level, home to its prior 12-month highs from late July. 

There's plenty of pessimism to be unwound in the security's options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.24 MU puts were bought to open for every call over the last 10 days -- a ratio that sits 2 percentage points from an annual high, hinting at a much healthier appetite than usual for long puts over calls. 

Considering this, now might be the time to speculate on Micron's next bounce with options. The equity's Schaeffer's Volatility Index (SVI) of 39% is in the 12th percentile of its annual range. This means near-term options are currently pricing in relatively low volatility expectations. Plus, MU sports a Schaeffer's Volatility Scorecard (SVS) of 90 (out of a possible 100), meaning the security had handily exceeded options traders' volatility expectations during the past year.


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