Chip Stock Gaps Higher After Analyst Upgrade

Calls have been popular in the options pits

Laura McCandless
Sep 14, 2020 at 3:07 PM
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The shares of Micron Technology Inc (NASDAQ:MU) are up 6.6% at $49.16 at last check, after an upgrade from Goldman Sachs to "buy" from "neutral." The firm believes Micron is well-positioned in terms of its competitors as it continues to execute on its technology transitions. Furthermore, the analyst in coverage noted that supply discipline from memory suppliers as well as price stabilization could serve as potential catalysts. 

Today's pop -- likely aided by Nvidia's (NVDA) big acquisition -- has MU reclaiming its 60-day moving average, which previously served as close support through the summer months. Still, the equity sports a 9% year-to-date deficit.

MU Sep 14

Lately, calls have been popular in the options pits. Micron stock sports a 50-day call/put volume ratio of 3.13 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 91st percentile of its annual range. This suggests these bullish bets are being picked up at a faster-than-usual rate.

Options look like a good way to go when weighing in on MU. The semiconductor stock's Schaeffer's Volatility Index (SVI) of 52% sits higher than 20% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations. In other words, the stock's near-term options are attractively priced at the moment.


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