9/13/2020 Plan: We look to sell a put spread in Micron (Ticker: MU)
9/13/2020 Plan (continued):
- MU- Sell 2 of the 25 Sept 42.5/40 put spreads for 0.28
- Prices are as of market close 9/11/2020, actual fill and strikes may differ depending on Monday’s open, post will be updated accordingly.
- All trades are for educational purposes and do not constitute advice
9/13/2020 Commentary:
Micron’s earnings are on 9/29 and we can see an increase in implied volatility in the options leading up to the event (in conjunction with a more volatile market overall). Realized volatility remains somewhat muted in this name and we place this trade assuming that the implied volatility is over priced and MU won’t drop below 42.5. We will be somewhat flexibly with the strikes and pricing, going up to the 43 strike if needed and taking a bit less depending on where the market opens. Note that we will Not push the trade out a week as that will include earnings.
If filled as planned and the options expire worthless next week, we’ll have a 12.6% return (28/222=12.6%).
Reach out with any questions on this or any other trade!
9/14/2020 Update:
Goldman Sachs upgraded Micron and the stock jumped nearly $3 today. The put spread was not available for our desired prices (only worth a few cents). We will keep MU on our watch list, but it is unlikely we’ll get to place the trade this week unless there is a big move down in the name.
9/21/2020 “Close”:
After Monday’s pop, Micron stayed pretty elevated throughout the week, with no opportunity to put this trade on. It *was* a good trade if it was placed on Friday, but we don’t want to chase a trade just to put it on. Each week, we plan for many trades, some we can get for better prices, some for slightly worse. Some we will simply pass on if the trade no longer fits within our planning parameters.
