$MU call prices double

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

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity on two separate occasions in calls that expire today.

–On Sep. 14, 17,200 September $50 calls were purchased for $0.27 to $0.85 above open interest of 13,041 contracts with shares at $48.98.
–On Sep. 16, 6,900 September $51 calls were purchased for $0.28 to $0.67 above open interest of 3,348 contracts with shares at $50.83.

Those calls have respectively traded for as much as $2.11 and $1.23 today, about double their purchase prices. The stock rose by as much as 6.45% in the same time frame, illustrating how quickly options can far outperform their underlying shares.

It is the second winning trade in the name posted on Market Rebellion this 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 is up 0.55% at $51.26 in morning trade today. The memory-chip maker was upgraded to a Buy from Neutral at Goldman Sachs Monday morning.