$MU call prices surge fourfold

Micron Technology has leveled off in recent days after a torrid run higher, but option traders are continuing to rack up big profits in the name.

On March 2, Investitute’s market scanners identified the purchase of 2,400 May $55 calls bought for $2.07 with shares at $48.97 This was clearly fresh buying, as open interest in the strike was just 147 contracts before the trade occurred.

Those calls traded up to $9 this morning, more than 4 times their purchase price. The stock rose 24.5% in the same time period, a large move but nowhere near that of its options.

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 rose to $60.99 this morning before pulling back with the rest of the market to close at $60.14, off 0.73% on the session. The memory-chip maker, which has ripped higher in recent weeks, held up better than most other large semiconductor names today.