Eleventh-Hour Micron Technology, Inc. (MU) Bulls See a Bigger Bounce

Micron Technology, Inc.'s (MU) weekly 3/13 28-strike call is in focus today

Mar 12, 2015 at 1:08 PM
facebook twitter linkedin


Micron Technology, Inc. (NASDAQ:MU) followed its sector peer Intel Corporation (NASDAQ:INTC) into the red at the open, after the latter offered up a dreary current-quarter sales forecast. Shares of MU have since recovered, though, and were last seen up 1% at $28.17. In the options pits, calls are trading at 1.6 times what's typically seen at this point in the day, with a number of speculators betting on a bigger bounce by week's end.

Drilling down, MU's weekly 3/13 28-strike call has seen the most action today, with 13,418 contracts on the tape -- roughly 30% of the equity's total intraday call volume. It appears the majority of these positions are being bought to open, as traders roll the dice on MU extending its lead north of $28 through tomorrow's close, when the weekly series expires. Delta on the call is docked at 0.59, suggesting a 59% chance the option will expire in the money.

Widening the sentiment scope reveals traders have preferred long puts over calls on a stock that's shed roughly one-fifth of its value in 2015. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MU's 50-day put/call volume ratio of 0.44 ranks in the 93rd annual percentile. In other words, puts have been bought to open over calls with more rapidity just 7% of the time within the past year.

Outside of the options arena, the brokerage bunch has taken a glass-half-full approach -- although it appears opinions are beginning to shift. Of the 21 analysts covering the shares, 18 maintain a "buy" or better rating, versus two "holds" and one "strong sell." Meanwhile, Micron Technology, Inc.'s (NASDAQ:MU) average 12-month price target of $42.35 stands at a 50% premium to current trading levels, as well as in territory not charted since August 2001.

Celebrate 40 Years of Schaeffer's With 4 FREE Stock Picks!


 




 
Special Offers from Schaeffer's Trading Partners