Options News
$MU calls turn quick gains
It took just days for bullish option traders to nearly doubled their money in Micron Technology (MU). On Aug. 9, Investitute’s market scanners identified the purchase of 5,000 September $41 calls for $2.82 to $2.89 as part of a bullish spread with shares at $41.40. This was clearly a new position, as open interest in […]
It took just days for bullish option traders to nearly doubled their money in Micron Technology (MU).
On Aug. 9, Investitute’s market scanners identified the purchase of 5,000 September $41 calls for $2.82 to $2.89 as part of a bullish spread with shares at $41.40. This was clearly a new position, as open interest in the strike was only 1,689 contracts before the activity appeared.
Those calls sold for as much as $5.25 today, almost twice their average purchase price. The stock rose 5.31% in the same time frame, showing how quickly options can far outpace gains in their underlying shares.
It is the second winning trade in the name posted on Investitute in the last month.
Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
MU is up 4.34% to $43.98 in afternoon trading. The memory-chip maker rallied sharply yesterday after the company’s chief financial officer said demand is returning.