Micron has yielded big gains on bullish option positions all year, and today was no exception.
Last Wednesday, Investitute’s tracking systems found that 9,300 Weekly $48 calls expiring this Friday were purchased for $0.21 to $0.28 with shares at $45.43. These were clearly new positions, as open interest in the strike was only 367 contracts before the activity appeared.
Those calls traded for $0.55 today, more than double their original purchase price. The rose was rose less than 5.3 percent at the same time, showing how quickly options can far outperform their underlying shares. It was the second winning trade in Micron posted on Investitute this month.
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 3.21 percent today to close at $47.64. The company will report earnings on Dec. 19 after the market closes.