$MU bears triple their money

Nimble option traders posted quick gains on bullish positions in Micron just last week, and today they collected large profits on downside contracts.

On Sept. 25, Investitute’s proprietary programs flagged the purchase of 5,000 January $38 puts for $1.31 to $1.33. The trade was part of a bearish spread with shares at $44.65.

Those puts sold for $3.75 today, about 3 times their purchase prices. The stock fell 18.12% in the same time period, a large move but nowhere near that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

That followed a bullish option trade on Nov. 15, when traders tripled their money in just a few hours.

MU closed at $36.38 today, up 0.72% but only a penny above its session low. Baird downgraded the memory-chip maker two notches to “underperform” from “outperform” yesterday and slashed its price target to $32 from $75.