/Micron%20Technology%20Inc_%20logo%20on%20building-by%20vzphotos%20vis%20iStock.jpg)
Today, a large tranche of out-of-the-money (OTM) put options traded in Micron Technology (MU) stock. Given the recent pullback in MU stock, this is a bullish signal for investors and a good income yield play.
This options play can be seen in the Barchart Unusual Stock Options Activity Report for Wednesday, Jan. 29.
For example, MU is now trading for $88.38, down from a recent peak of $109.23 on Jan. 22. But this provides a good buy-in opportunity for investors. This is due to the fallout from the recent selloff of semiconductor stocks like Nvidia (NVDA) as a result of the DeepSeek AI saga.
However, as I will show below, the OTM short-put play highlighted in the Barchart report provides a good short-term income yield opportunity.
Short OTM Put Option Play
The Barchart Unusual Stock Options Activity Report today shows that over 7,800 put option contracts have traded at the $75.00 strike price for expiration on March 7. That is over one month away - 37 days to expiry (DTE).
This strike price is $13.31 below today's trading price, so it is deeply out-of-the-money (OTM). That means that the buyers of these puts believe MU stock will crater from here during the next month.
Really? That seems like an overreaction. The premium paid by these put buyers is very high - i.e., $1.10 at the midprice. That means that the buyers of these puts won't even make any money unless MU stock falls to $73.90 or lower.
That is 16.3% below today's price.
The reality is that this is a good entry and buy-in price for any short-seller of these puts. More on that below. But these short-sellers can also make a good yield.
For example, $1.10 / $75.00 = 1.4667% for the next 37 days. That works out to an expected return (ER) of 4.40% (i.e., 1.4667% x 3) if that yield play can be repeated 3 times over the next 111 days, i.e., a little over one quarter and a half month.
That is a very good yield and ER for these cash-secured short-put plays.
Why MU Stock Looks Cheap Here
At today's price, MU stock trades for just 12x forward earnings estimates, according to Yahoo! Finance. That is well below its historical average forward earnings (P/E) multiple.
For example, Seeking Alpha reports that the average 5-year forward earnings multiple has been 83x and its trailing 12-month (TTM) P/E is 15.75x.
That implies that the MU stock could be worth 31.25% more (i.e., 15.75x/12x= 1.3125), or $116 per share.
This coincides with analysts' earnings per share (EPS) estimates for this year. For example, Seeking Alpha shows that EPS for the year ending Aug. 2025 is $6.89 and the following year is $11.17 per share. That works out to an average run-rate EPS of $9.03.
As a result, even at 12x this run-rate EPS, MU stock could be worth $108.36, or +22.5% higher than today's price.
Analyst Price Targets
This also lines up with analysts' price targets, which are significantly higher than today's price. For example, Yahoo! Finance reports that the average of 39 analysts' price targets is $139.35 per share. Moreover, Barchart's mean survey is $131.82 per share. This works out to an average of $135.39.
Let's think about that. Even if analysts cut their price targets by 15% from here due to the DeepSeek saga, and the general selloff recently, that still means the price target will be $115.25.
That is also where AnaChart.com reports that 28 analysts have for MU stock: $117.78. AnaChart tends to only survey recent analyst writeups on the stock, and weeds out analysts who have stopped covering the stock.
The point is this is still +30% over today's trading price.
The Bottom Line
So, no wonder so many of these out-of-the-money (OTM) put options have traded today. The Barchart report shows that this number of contracts is over 37 times the prior outstanding number of put contracts.
It makes sense to do cash-secured short-put plays in near-term expiration MY put options, given the high yields available and the implied potential upside.
For example, if MU stock falls to $75.00 in the next 37 days, those who short these puts could potentially have a huge expected return (ER).
This ER would be over 57% (i.e., $117.78/$75.00 = 1.57) if MU ends up at the $117.78 AnaChart target price for MU stock.
