Micron has been a favorite target of upside option activity recently, and traders are cashing in on the name once again.
On Sept. 14, Investitute’s tracking systems noted that 9,500 Weekly $35.50 calls that expired this afternoon were purchased for $0.30 to $0.32 with shares at $34.77. This was clearly fresh buying, as open interest in the strike was only 570 contracts before the activity appeared.
Today those calls traded for $0.73, more than doubling in value barely a week later. The stock was up just 4.1 percent at the same time, underscoring the type of leverage that can be obtained with options. It was the second winning call trade in Micron posted on Investitute in the last week and one of several bullish plays in in the name recently, as noted by Investitute co-founders Jon Najarian on CNBC’s “Halftime Report” last month and Pete Najarian, who chose MU for his final trade on the network’s “Fast Money” program Tuesday night.
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 was up 0.45 percent to $36.07 today. The company has gained steadily along with other chip makers for several weeks and is just off its 52-week highs.