Micron bulls are back in the chips

The selloff that hit the technology sector on Friday proved to be a buying opportunity for Micron, and upside option traders are reaping the rewards.

On April 26, Investitute’s proprietary programs identified the purchase of 4,500 June $27 calls for $1.35 as part of a bullish vertical spread. Shares traded for $26.66 at that time.

Today those calls went for $4.30, more than tripling in value. The stock rose less than 17.3 percent in the same period, illustrating how far options can outperform their underlying shares.

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 was up 1.09 percent to $31.54 today. The memory-chip manufacturer pulled back in Friday’s “tech wreck” but is back trading at multi-year highs.