Micron (MU) Swoon Catches the Eye of Option Bears

Micron Technology, Inc. (MU) puts are trading at two times the average intraday pace

by Karee Venema

Published on Mar 25, 2015 at 2:15 PM
Updated on Jun 24, 2020 at 12:55 PM

Micron Technology, Inc. (NASDAQ:MU) is following its sector peers into the red today -- last seen off 4.7% at $26.66, after MKM Partners started the equity with a lackluster "neutral" rating. Against this backdrop, puts are once again trading at a rapid-fire rate -- double the average intraday pace, to be specific -- with a number of speculators apparently rolling the dice on additional losses over the next several weeks.

MU's April 27 put has seen the most action, where nearly 7,600 contracts have changed hands so far. There appears to be some buy-to-open activity here, as traders bet on the security extending its trek south of the strike through the close on Friday, April 17 -- when the contracts expire -- a time frame which includes the company's earnings report, due the evening of Thursday, April 2. Amid today's drop, delta on the put has moved to negative 0.52 from negative 0.35 at last night's close, signaling an increased probability of an in-the-money finish.

Today's accelerated put activity is nothing new for the stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MU's 10-day put/call volume ratio of 0.51 ranks higher than 83% of similar readings taken in the past year. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

This glass-half-empty approach shouldn't be too surprising, either, considering shares of MU have shed almost 24% year-to-date, and are currently on track to notch their lowest daily close since May 20. Should Micron Technology, Inc. (NASDAQ:MU) continue to struggle, a round of downgrades and/or price-target cuts could pressure the shares lower. At present, roughly 86% of covering analysts maintain a "buy" or better rating, while the average 12-month price target of $41.88 rests in territory not charted since August 2001.


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