Options Traders Stay Positive on Micron Technology, Inc. (MU)

Call buying remains popular on Micron Technology, Inc. (NASDAQ:MU), even with its recent struggles

by Josh Selway

Published on May 20, 2015 at 2:07 PM
Updated on Jun 24, 2020 at 10:16 AM

Even though Micron Technology, Inc. (NASDAQ:MU) saw its price target reduced at Deutsche Bank to $32 from $34, the brokerage firm kept its "buy" rating, mirroring the general opinion on the Street. Seventeen of 21 brokerage firms maintain "buy" or better recommendations on the semiconductor issue. This bullish sentiment is also apparent based on MU's consensus 12-month price-target of $38.59 -- a 44% premium to the stock's current price of $26.78, and territory not charted since March 2002. With the shares 1.8% higher today, option traders are following this bullish pattern, as call volume is accelerated.

In fact, almost five times as many calls have crossed today compared to puts. It appears traders are buying to open the weekly 5/22 26.50-strike call, MU's most popular contract. By doing so, they're betting on the equity to extend its lead above $26.50 by the close this Friday, when the weekly series expires.

It hasn't been a good few months for the stock. Specifically, since Micron Technology, Inc. (NASDAQ:MU) hit a 12-year high of $36.59 on Dec. 8, it's dropped almost 27%. That's why it's interesting to note that MU's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio comes in at 4.06, and is only 12 percentage points from an annual high. If you consider this reading, plus the bullish stance analysts have taken, the shares could see headwinds from a reversal in sentiment, should they continue to struggle.


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