$MU bulls see sixfold increase in calls

Micron has turned enormous profits for upside options all year, and today was no exception.

On Sept. 12, Investitute’s tracking systems detected the purchase of 29,700 November $37 calls for $1.30 as part of a bullish roll with shares at $34.28. Open interest in the strike was only 1,002 before the trade occurred, showing that this was a new position.

Those calls traded for $7.80 today, 6 times their purchase price. The stock rallied 31 percent in the same time, a huge move but still far below that of its options on a relative basis. Investor co-founder Pete Najarian cited another bullish trade in the name today, this time in the January 46 calls, on CNBC’s “Halftime Report.”

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 2.94 percent to close at $44.78 this afternoon. Micron, which has been climbing since reporting earnings in late September, rose along with other chip makers after Nvidia beat quarterly forecasts and hit all-time highs today.