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Micron TechnologyMU stock showed some positive signs on Tuesday, closing 12.17% higher on the day and breaking above its 50-day moving average. It's holding those gains so far, despite a market pullback.
Shares of the memory chips and storage maker have been under pressure for the last month. But they seem to have found support at the 800 level. Traders looking for a way to play Micron stock using options could use a bull put spread.
As a reminder, a bull put spread is a defined risk strategy, so you always know the worst-case scenario in advance.
This type of trade will profit if Micron Technology stock trades sideways or higher and even sometimes if it trades slightly lower. The trade offers flexibility in uncertain markets.
The strategy involves simultaneously selling a higher strike put option while buying a lower strike put option in the same expiration cycle. In exchange for selling the bull put spread, the trader receives the option premium and has risk equal to the difference in strike prices, less the premium received.
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Micron Bull Put Spread Trade Setup
Bull put spreads are a favorite strategy for option sellers. Here's an example of the trade on Microsoft MSFT stock presented on July 21.
Traders who think Micron stock will stay above 800 for the next few weeks could sell an Aug. 21 800-795 bull put spread for around $1.20. Selling this spread would generate roughly $120 in premium with a maximum risk of $380.
If the spread expires worthless, that would be a 32% return in four weeks provided the chipmaker's stock is above 800 at expiration. The maximum loss would occur if Micron Technology stock closes below 795 on Aug. 21. In that case, the premium seller would lose $380 on the trade.
The break-even point for the trade is 798.80, which is calculated as 800 minus the $1.20 option premium per contract. That's around 17.8% below the current price.
It's a solid move to set a stop loss if the stock breaks below 850, or if the spread increased in value from $1.20 to $2.40. Sticking to this stop loss level will help avoid large losses if the stock drops back down.
Memory Chip Manufacturer's Ratings At IBD
For investors seeking income generation with defined risk parameters, this Micron Technology bull put spread presents an appealing opportunity in the current market environment.
Micron Technology continues to benefit from powerful AI‑infrastructure demand. Investor's Business Daily gives Micron Technology stock a Composite Rating of 96 out of 99. According to IBD Stock Checkup, Micron Technology ranks fourth in its group.
Hyperscalers are driving record consumption of DRAM and NAND memory products. In particular, demand is strong for high‑bandwidth memory, an area where Micron's diversified product stack gives it leverage across multiple AI build‑outs.
Analyst commentary remains constructive, noting that despite recent volatility, strong cloud‑memory growth and expanding data‑center deployments support a slightly bullish outlook for the rest of 2026.
The stock's Earnings Per Share Rating is 84 and its Relative Strength Rating is top-notch at 99.
Please remember that options are risky, and investors can lose 100% of their investment.
This article is for educational purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
Gavin McMaster has a master's in applied finance and investment. He specializes in income trading using options, and is conservative in his style. He also believes patience in waiting for the best setups is the key to successful trading. Follow him on X/Twitter at @OptiontradinIQ.
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