53% Return 📈 in 2 days: Micron Tech. Calls

A high-probability technical pattern, combined with leveraged exposure through options, has yielded a sizable return for minimal risk. Let's explore the strategy and reasoning in this brief.

Date: August 11, 2025

Asset: Micron Technology, Inc. ($MU)

Distribution: Post Market

Current Market Price: $123.71

Recommendation: Bullish

Strategy: Long Call Option

Moneyness: In-the-money (ITM)

Investment Horizon: Short-term (15 to 30 days)

Exit duration: Close on demand for profit

Market Summary

With a breather from the Trump administration regarding tariffs on semiconductor chips entering the US, which are exempt if they are part of systems rather than standalone components, tech giants NVDA, AMD, and the rest of the chip sector stocks gained market caps at the end of last week. Micron Technology's fourth-quarter outlook boost can be boiled down to higher prices. Its Chief Business Officer says, "Pricing trends have been robust, and we have had great success in being able to push pricing up across end markets. Volume shipments were in line with Micron's earlier projections, and demand is strong across several end markets, particularly on the AI and data center side".

MU provided strong future guidance, with Q4 revenue expected to reach $11.2 billion and adjusted EPS of $2.85, driven by strong demand and robust DRAM pricing. What do you see from this? The AI revolution is now being cemented and strengthened going forward, with several chipmakers increasing their capital expenditures on R&D and production.

Technical Analysis

Examining the daily chart of $MU, it is evident that it displays a textbook pattern known as a "bullish flag," characterized by a "flag pole" and a parallel channel that form the "flag," as indicated by the purple lines with annotations.

Additionally, it had a bullish divergence between the price and the MACD as shown in the bottom indicator. To further strengthen this, there's a trendline break to the overbought side on RSI, meaning there is a rising interest in the stock which is confirmed by the break of the parallel channel as shown in the chart.

Why In-The-Money Calls?

After scanning this pattern, we took a long position in Micron through in-the-money call options for December expiry. The biggest mistake rookie traders make is to buy cheap options far out-of-the-money (OTM) with only extrinsic value (time value + volatility) and zero intrinsic value (delta > 50 or real value of the option); this may yield some profits some of the time, but is unsustainable over the long term. Why? Not all stocks will possess momentum and provide immediate feedback to the trader; they often spend time moving sideways and slowly moving to the upside. The problem with this is that even if the stock is moving in the direction of the far OTM long call option, theta works against you (time decay), and thus, it won't be profitable even if it moves closer until the expiration.

Therefore, we secured some intrinsic value by purchasing slightly in-the-money calls, and let the stock rise with aggressive delta (high delta works in favor of option buyers), yielding greater profit than buying far OTM options, which barely move due to their low delta.

Delta is a measure of how much the option price changes with respect to a $1 change in the underlying stock price. A 50 delta move changes the call option price by 50 cents for a $1 move in the stock.

The benefit of trading ITM calls is that you gain greater leverage exposure, which can amplify gains as stocks move up, as per your analysis. The most important thing is that we have a strong conviction in the direction, which is evident from the above-mentioned technical analysis.

Therefore, we combined a high-probability technical chart pattern with rising momentum and a simple yet highly effective long ITM call strategy for a substantial return in just one trading day, with the trade being opened on Friday and closed on Monday at market open.

Trade Overview

Buy to Open (BTO): 1 contract of Jan 110 Call at a debit of 16.6 (total cost: $1,660).

Sell to Close (STC): The same contract at a credit of 25.45 (total proceeds: $2,545).

Net Profit: $885 (calculated as (25.45 - 16.6) × 100 shares per contract).

Return on Capital (RoC): 53% in 2 days (profit divided by initial debit/risk).

Since the position was closed after 2 days, the payoff is fixed at +$885, with no further exposure. However, for illustrative purposes, the payoff profile is shown below, assuming the long call was held to expiration (January, likely 2026, based on the given date context). This illustrates hypothetical outcomes at various stock prices if the trade is not closed early. Payoffs are shown per share (multiply by 100 for per-contract dollar amounts). The breakeven stock price is 110 + 16.6 = 126.6.

Payoff Profile

NOTE: The trades shown here are hypothetical and may differ from the actual trade alerts sent. Please consider this brief, which provides an idea of the trade perspective at a scale suitable for large accounts. The trades taken should be well under Max Risk, which is 2% of the account equity. To have a positive expectancy over a series of trades, there should be no deviation from the max risk mandate, which we strongly emphasize for every alert.

Conclusion

Going forward, we expect the stock to rise further to complete the equivalent distance of the "Flag Pole" as shown in the chart earlier, meaning we just closed in profit at a resistance zone after a gap up, which could likely be filled downward in the coming days before launching to the upward direction later. Overall, we continually monitor and balance our exposure to position ourselves for any potential headwinds arising from the economy or global macroeconomic factors. We might consider another long-term opportunity in the coming days.

Thank you for taking the time to read this brief. If you have any questions, please post them in the comments section, and one of our analysts will respond promptly.

Disclaimer: This trading brief is for informational purposes only and does not constitute financial advice. Options trading involves significant risks, including the potential loss of the entire investment. Investors should consult a financial advisor and conduct their due diligence before executing any trades. Please read the risk disclosure at OCC to understand the risk considerations required to trade options.

Notes on Assumptions: Premiums are based on direct market access tools available at our desks; actual order fills for you as a trader may vary depending upon the time of execution, broker data feed, market access, etc., among many other factors. Charts and technicals exclude fees.