$MU bulls quadruple their money

Micron Technology surged with analyst upgrades today, handing exponential gains to upside option traders.

On March 2, Investitute’s tracking systems detected the purchase of 2,400 May $55 calls for $2.07 with shares at $48.97. This was clearly fresh buying, as open interest in the strike was only 147 contracts before the activity appeared.

Those calls rose to $9.06 today, more than 4 times their purchase price. The stock rose 24.9% in the same time frame, showing how quickly options can far outpace gains in their underlying shares. It was the second winning Micron trade posted on Investitute in the last week.

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 jumped 8.76% to $59.37 today. Nomura Instinet raised their price target on the memory-chip maker to $100 from $55 today, while Evercore ISI lifted its target on the name to $80 from $60.