Put buying targets key Micron level

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Traders are apparently betting that Micron will stay trapped below an eight-month resistance level in the next two weeks.

More than 12,000 January 7 puts traded with a heavy bearish bias on Friday, led by a print of 5,500 that was bought for $0.19. Open interest in the strike was only 268 contracts at the beginning of the day, so this was clearly new activity.

MU gained 0.87 percent on Friday to close at $6.96 after breaking back above its 200-day moving average earlier in the week. The memory-chip maker had gapped down from resistance near $7 after its last earnings report on Dec. 20 but bounced back to that level with last week's broad market rallies.

The put buying was not linked to any stock trades identified by our systems on Friday, so it could be a straight bearish bet that MU will close below that $7 resistance at expiration on Jan. 18. This level, which has been targeted repeatedly by option traders, has been tested several times but has not been broken since April as the stock continued trading a range that took it to a 52-week low of $5.16 on Oct. 24.

The company is scheduled to make a spate of appearances at industry conferences in coming months, including the JP Morgan Annual Tech Forum at CES on Jan. 8 and the Annual Needham Growth Conference on Jan. 16. Four more presentations are on tap for February alone.

Friday's trading pushed Micron's overall option volume to 35,891 contracts, 2.5 times higher than its daily average for the last month. Puts outnumbered calls by nearly 2 to 1.

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