Since bottoming at $9.31 just last year, Micron Technology, Inc. (NASDAQ:MU) has climbed, nay skyrocketed, 340% to its current perch of $41. Fueled by the mega-bull market in semiconductors, MU stock has become a bona fide beast.
What attracted me to Micron for today’s highlight, aside from my desire to fawn over such a beautiful uptrending stock, was its high-quality price pattern forged in recent days. Unlike the lion’s share of the market which is scheduled to report earnings over the next few weeks, MU has already stepped up to the plate (Sept. 26), knocked the cover off the ball and resumed its northward march.
And that means we don’t need to worry about an earnings miss throwing a wrench into our trade.
Like with all good uptrends, MU stock has been climbing steadily above a rising 20-day, 50-day, and 200-day moving average. And with the stock now trading in the $40s, it’s visiting waters untouched since 2001. Needless to say, its relative strength is through the roof. Today is the eighth day of a sideways consolidation pattern that has allowed Micron shares to work-off overbought pressures. And now, the 20-day has caught up signaling it’s time for the stock to resume trending.
It’s also a bullish omen that this morning’s sharp sell-off was swiftly bought proving dip buyer are still very much alive and well.
The MU Trade
Since MU may need to pause for a few days more before breaking out, I suggest waiting for a breach of the $42 resistance zone before pulling the trigger. And since the implied volatility rank is sitting at a relatively low 20%, long option plays are the way to go.
Buy the Dec $41 calls for around $2.60 (the price will be higher if you wait for the breakout). Owning calls sets you up to participate in a potential end-of-year run in the chip space.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.