Micron closed at $948.8, up 1.11% on Wednesday and rose another 3% in premarket trading on Thursday.
“This reset on price does not mean the cycle is over. Instead, it is more likely that this is a necessary reset for the cycle to eventually extend. Bear in mind that we have had three such resets since Generative AI was launched in the fall of 2022,” wrote Morgan Stanley analyst Shawn Kim in a research note this week.
The “real tell” will be the coming earnings season and whether hyperscale companies keep or raise their capital expenditure guidance, wrote Morgan Stanley’s Kim. If so, then current levels for memory stocks will be a “good entry point.”
Options Indicators
MU’s implied volatility is 106.70%, and with an IV percentile of 90.04%, current option volatility sits in the elevated range, indicating that options are priced expensively relative to their own historical levels.
At the same time, the IV/HV ratio of 0.88 suggests implied volatility is running slightly below realized volatility, but overall the market is still assigning a rich premium to MU options based on where current IV stands versus its historical distribution.
The Call/Put volume ratio is 1.00.
Large Trades
As for options market, a PUT sale worth $9.45 million was the standout large trade, with 15,000 contracts sold at the 690.00 strike expiring on 2026-07-17.
Source: Tiger Trade App
Considering the corresponding increase in open interest on the same day, this large Sell Put order was likely a newly opened position. With MU referenced at $938.38, this put was out of the money, making it a structurally bullish trade.
Selling an out-of-the-money put at such a distant strike typically reflects willingness to collect premium while expressing confidence that the stock will remain comfortably above 690.00 into expiration, and it can also signal interest in accumulating shares only if a deep pullback occurs.
Strategy Reference
Sellers preferring to collect premium with a very low probability of assignment might consider even more distant out-of-the-money strikes, while those seeking to define risk and reduce margin could implement a bull put spread by buying a lower strike put against a sold one.
Comments