Micron (MU) Swoon Catches the Eye of Option Bears

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

Mar 25, 2015 at 2:15 PM
facebook twitter linkedin


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.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners