Bulls quintuple money in $MU

Option traders collected huge gains on upside positions in Micron that expired this afternoon.

On Jan. 14, Investitute’s tracking systems found that 3,800 Weekly $36 calls expiring today were purchased for $0.64 to $0.75 with shares at $34.70. Volume was well above the strike’s previous open interest of 2,715 contracts, indicating that this was fresh buying. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $3.25 today, 5 times their initial purchase price. The stock rose 12.85% in the same time frame, underscoring how options can far outperform their underlying shares.

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 jumped 6.48% to $38.96 today. The memory-chip maker hit a 52-week low of $27.39 on the day after Christmas but has since rebounded sharply with the rest of the semiconductor industry.