$MU calls turn quick profits

It took barely a week for bullish option traders to double their money in Micron (MU).

On July 11, Investitute’s market scanners identified the purchase of 7,000 August $45 calls for $1.12 to $1.36 with shares at $43.35. This was clearly fresh buying, as volume was far above the strike’s previous open interest. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $2.62 this afternoon, more than twice their average purchase price. The stock rose 5.93% in the same time frame, illustrating the kind of leverage that can be achieved with options.

It is the third winning trade in the name posted on Investitute in the last month.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

MU is up 2.69% to $45.87 in afternoon trading. The memory-chip maker rallied after quarterly results on June 25 and rose again today after rival Taiwan Semiconductor Manufacturing (TSM) reported strong earnings and revenue last night.