Chip bulls find profits in $MU

Option traders are logging big gains on upside positions in Micron (MU) today on positions recently opened.

On Dec. 1, Market Rebellion’s activity scanners flagged the purchase of 25,000 November $70 calls for $1.20 to $1.63 as part of a bullish roll from a previous entry on our Unusual Activity Log, above the open interest of 4,214 contracts with shares at $66.97.

Market Rebellion co-founder Jon Najarian cited the unusual option activity on CNBC’s “Halftime Report” that day.

That previous entry that our Unusual Activity Scanners marked was on Nov. 16, as 21,856 December 65 calls were bought for $1.42 above the open interest of 1,608 contracts, with shares at $61.14 at the time, which Market Rebellion co-founder Pete Najarian also cited on CNBC’s “Halftime Report” the day of. Even more, that trade was also a roll from an existing winning position identified by Market Rebellions proprietary algorithms.

Those December $70 and $65 calls each sold for as much as $5.33 and $9.55 today, more than 3 and 6.5 times their respective purchase prices. The stock rose by as much as 10.99% in the same time period, a large move but nowhere near that of its options on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

MU ended today up 4.92% at $73.34, setting fresh 52-Week highs this session. The memory-chip maker’s price target was raised to $85 from $65 at Argus this morning.