Put Traders Eye Chip Stock as Forecast Disappoints

Puts have are getting picked up at a much quicker-than-usual clip

Digital Content Manager
Dec 22, 2022 at 10:25 AM
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Micron Technology Inc (NASDAQ:MU) is off 3.6% at $49.38 this morning, after the company yesterday reported wider-than-expected fiscal first-quarter losses of 4 cents per share and a revenue miss. The company also issued a disappointing fiscal second-quarter forecast, and noted it expects to lay off 10% of its workforce over the next year due to a "supply-demand mismatch."

In turn, four firms have cut their price targets on MU, including Mizuho to $48 from $50. Analysts have been bullish towards the equity, with 20 of the 27 in coverage calling it a "buy" or better, while the 12-month consensus target price of $64.57 is still a 30.5% premium to current levels.

The options pits are far less optimistic. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.43 ranks higher than all but 2% of readings from the last year. This means puts have been getting picked up at a much quicker-than-usual clip.

Drilling down to today's options activity, 42,000 puts and 25,000 calls have crossed the tape, which is eight times the volume that's typically seen at this point. Most popular by far is the 12/23 48-strike put, where new positions are currently being bought to open.

The security has been chopping lower since the $65 level rejected its November rally. That area also snubbed the shares in mid-August, which led to MU's Sept. 23, roughly two-year low of $48.45. Micron Technology stock is now trading firmly below its 20-day moving average, and carries a 46.8% year-to-date deficit.

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