It’s shaping up to be a rough earnings season for the semiconductor sector. Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD) both plunged following their respective trips to the earnings confessional, and Nvidia Corporation (NASDAQ:NVDA) makes its debut after the close next Tuesday. It has made for some choppy waters for fellow chips maker Micron Technology, Inc. (NASDAQ:MU), but the stock is weathering the storm rather well.

Micron posted its quarterly report back in March, and there were no AMD or Intel-style hiccups to be found. Citing tight demand for DDR3 and DDR4 memory modules, Micron blew past Wall Street’s estimates and boosted guidance for the current quarter.

Click to Enlarge  Technically, MU stock gapped higher following earnings and tested resistance near $30. But before Micron stock could take out $30, weakness and profit taking overtook the semiconductor sector as a whole. MU staged an orderly pullback to support near its 50-day moving average, and, as a result, filled in its post-earnings gap higher.

Having now worked off an overbought situation, MU stock now appears ready to resume its year-long rally higher.

Sentiment is highly favorable for just such a run. Bullish sentiment abound in the brokerage community, as Thomson/First Call reports that 28 of the 30 analysts following MU stock rate the shares a “buy” or better, while the 12-month consensus price target rests near $38.63, versus MU’s close at $28 yesterday — leaving plenty of room to run before valuation concerns kick in.

Elsewhere, short sellers ramped up their positions in the wake of Micron’s earnings in hopes of profiting from a post-earnings selloff. While MU stock did dip after tagging $30, the shares have held their ground above key support.

A return to the $30 region and a breakout could send the weaker short hands scrambling for the exits, and with more than 4% of MU stock’s float sold short as of the most recent reporting period, there is fuel for a covering rally here.

Finally, either options traders are quite bullish on the shares, or short sellers are hedging their bets heavily. Currently, the May put/call open interest ratio rests at 0.48, down from readings north of 0.53 just a month ago as calls continue to be added at a faster rate than puts.

Overall, May implieds are pricing in a potential move of nearly 4.5% for MU stock heading into expiration on May 19. The resulting upper bound lies at $29.81, while the lower bound rests at $26.19. These levels also correspond with support near MU’s 50-day moving average and resistance near $30, and a breakout in either direction could lead to a larger move than options traders are expecting.

2 Trades for MU Stock

Call Spread: MU stock has all the hallmarks of a solid long position: strong fundamentals, solid price action and improving market demand. Traders looking to bet on a continued run higher might want to consider a May $29/$30 bull call spread.

At last check, this spread was offered at 19 cents, or $19 per pair of contracts. Breakeven lies at $29.19, while a maximum profit of 81 cents, or $81 per pair of contracts, is possible if MU stock closes at or above $30 when May options expire.

Put Sell: The one thing going against MU stock right now is the rest of the semiconductor sector. With Nvidia on tap for earnings on Monday, it could add pressure to MU stock if things don’t go well — especially after AMD and Intel both reacted so poorly. As such, traders looking for a more neutral strategy to take advantage of technical support might consider a May $25 put sell.

At last check, this put was bid at 12 cents, or $12 per contract. In this trade, you keep the premium as long as Micron stock closes above $25 when May options expire. On the downside, if MU trades below $25 prior to expiration, you could be assigned 100 shares for each put sold at a cost of $25 per share.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.