Micron's Call Options Attract Financial Giants as Stock Reaches All-Time High
Micron Technology's continued ascent to an all-time high is also boosting the stock's call options, attracting financial giants.
Block trades with combined premiums of $8.7 million in Micron call options were posted Monday amid stock's runup to a record. The biggest of them involved a short call position where the seller stands to collect a premium of $2.8 million for writing options that give the holder the right to buy 200,000 Micron shares at $155 each by Oct. 18.
The block trade for 2,000 call options was executed near the bid price, signaling a bearish leaning, data compiled by moomoo showed. The price of the contract rose 32% to $16.75 a share as of 2:10 p.m., as the stock rallied.
Shares advanced as Bank of America Global Research analyst Vivek Arya reportedly named Micron as the "top U.S. memory company" and raised the price target on the stock to $170m, from $144.
Arya noted the expected surge in demand for memory as $Dell Technologies (DELL.US)$, $HP Inc (HPQ.US)$, $LENOVO N3207 (05382.HK)$, and other hardware companies roll out artificial intelligence-powered personal computers, Barron's reported.
More than 268,000 Micron options changed hands as of 2:29 p.m., landing the company in the ninth slot most active stock options, behind Nvidia, $Tesla (TSLA.US)$, $Apple (AAPL.US)$, $GameStop (GME.US)$, Advanced Micro Devices, $Palantir (PLTR.US)$, $Amazon (AMZN.US)$ and $Microsoft (MSFT.US)$.
While Micron's options volume is driven by the stock's investment appeal, $Advanced Micro Devices (AMD.US)$'s increased trading was driven by the stock's sell-off.
More than 565,000 AMD options traded as of 2:50 p.m. in New York, as shares shares slipped 0.5%. The stock has fallen over the past week after Morgan Stanley downgraded the chip maker to equalweight or neutral from overweight, noting that investor expectations for the company's AI business seems "too high." Morgan Stanley noted that the stock's recent surge made AMD expensive, compared to its peers $NVIDIA (NVDA.US)$ and $Broadcom (AVGO.US)$.
Nvidia trades at 77 times trailing earnings, while Broadcom has a price/earnings ratio of 79. AMD's PE ratio is 230.
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Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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